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AUTHENTICATED , 
US. GOVERNMENT 
INFORMATION ^ 


S. Hrg. 114-409 

CUSTOMER SERVICE AND BILLING PRACTICES IN 
THE CABLE AND SATELLITE TELEVISION INDUSTRY 


HEARING 

BEFORE THE 

PERIilANENT SUBCOMMITTEE ON imM^STIGATIONS 

OF THE 

COMMITTEE ON 
HOMELAND SECURITY AND 
GOAH]RNMENTAL AFFAIRS 
UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 
SECOND SESSION 
JUNE 23, 2016 


Available via the World Wide Web: http://www.fdsys.gov/ 
Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 



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S. Hrg. 114-409 

CUSTOMER SERVICE AND BILLING PRACTICES IN 
THE CABLE AND SATELLITE TELEVISION INDUSTRY 


HEARING 

BEFORE THE 

PERIilANENT SUBCOMMITTEE ON imM^STIGATIONS 

OF THE 

COMMITTEE ON 
HOMELAND SECURITY AND 
GOAH]RNMENTAL AFFAIRS 
UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 


JUNE 23, 2016 


Available via the World Wide Web: http://www.fdsys.gov 
Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 



U.S. GOVERNMENT PUBLISHING OFFICE 
21-423 PDF WASHINGTON : 2016 


For sale by the Superintendent of Documents, U.S. Government Publishing Office 
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 
Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 




COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AEFAIRS 


RON JOHNSON. Wisconsin. Chairman 


JOHN McCAIN, Arizona 
ROB PORTMAN, Ohio 
RAND PAUL, Kentucky 
JAMES LANKFORD, Oklahoma 
MICHAEL B. ENZI, Wyoming 
KELLY AYOTTE, New Hampshire 
JONI ERNST, Iowa 
BEN SASSE, Nebraska 


THOMAS R. CARPER, Delaware 
CLAIRE McCASKILL, Missouri 
JON TESTER, Montana 
TAMMY BALDWIN, Wisconsin 
HEIDI HEITKAMP, North Dakota 
CORY A. BOOKER, New Jersey 
GARY C. PETERS, Michigan 


Christopher R. Hdcon, Staff Director 
Gabrielle a. Batkin, Minority Staff Director 
John P. Kilvington, Minority Deputy Staff Director 
Laura W. Kilbride, Chief Clerk 
Benjamin C. Grazda, Hearing Clerk 


PERMANENT SUBCOMMITTEE ON INVESTIGATIONS 

ROB PORTMAN, Ohio Chairman 

JOHN McCAIN, Arizona CLAIRE McCASKILL, Missouri 

RAND PAUL, Kentucky JON TESTER, Montana 

JAMES LANKFORD, Oklahoma TAMMY BALDWIN, Wisconsin 

KELLY AYOTTE, New Hampshire HEIDI HEITKAMP, North Dakota 

BEN SASSE, Nebraska 

Brian Callanan, Staff Director 
Margaret Daum, Minority Staff Director and Chief Counsel 
Kelsey Stroud, Chief Clerk 


(H) 



CONTENTS 


Opening statements: Page 

Senator Portman 1 

Senator McCaskill 4 

Senator Paul 22 

Senator Lankford 25 

Prepared statements: 

Senator Portman 41 

Senator McCaskill 44 

WITNESSES 

Thursday, June 23, 2016 

Tom Karinshak, Senior Vice President, Customer Service, Comcast Cable 9 

John Keib, Former Executive Vice President and Chief Operating Officer, 

Residential Services, Time Warner Cable Inc 11 

Kathleen “Kip” Mayo, Executive Vice President, Customer Operations, Char- 
ter Communications, Inc 12 

Rasesh Patel, Senior Vice President, Product Management, AT&T Entertain- 
ment Group (DirecTV) 14 

Kathleen Schneider, Senior Vice President, Operations, DISH Network, 

L.L.C 16 

Alphabetical List of Witnesses 

Karinshak Tom: 

Testimony 9 

Prepared statement 49 

Keib, John: 

Testimony 11 

Prepared statement 57 

Mayo, Kathleen “Kip”: 

Testimony 12 

Prepared statement 60 

Patel, Rasesh: 

Testimony 14 

Prepared statement 67 

Schneider, Kathleen: 

Testimony 16 

Prepared statement 73 

APPENDK 

Charter bill referenced by Senator McCaskill 48 

Staff Report 85 

Minority Staff Report 101 

Hearing Exhibits 163 

Letter regarding correction from Mr. Patel 181 

Statement for the Record from the National Association of Telecommuni- 
cations Officers and Advisors 183 

Responses to post-hearing questions for the Record 

Mr. Karinshak 185 

Ms. Mayo 200 

Mr. Patel 205 

Ms. Schneider 214 


(III) 




OVERSIGHT OF CUSTOMER SERVICE IN THE 
CABLE AND SATELLITE TELEVISION 
INDUSTRY 


THURSDAY, JUNE 23, 2016 

U.S. Senate, 

Permanent Subcommittee on Investigations, 

OF THE Committee on Homeland Security 
AND Governmental Affairs, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:05 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Rob Portman, 
Chairman of the Subcommittee, presiding. 

Present: Senators Portman, Paul, Lankford, Ayotte, McCaskill, 
Tester, Baldwin, and Heitkamp. 

OPENING STATEMENT OF SENATOR PORTMAN 

Senator Portman. The Committee will come to order. 

We are here today to discuss a topic that affects just about eveiy 
American family and often frustrates all of us as American fami- 
lies, and that is our cable or satellite TV service. For over a year 
now. Senator McCaskill and I have undertaken an investigation of 
the cable and satellite television industry. As many of you know. 
Senator McCaskill has been interested in this issue for many years, 
from her role on the Commerce Committee. She will talk about 
that. We both have a keen interest in making sure cable and sat- 
ellite companies do right by their subscribers. 

The Subcommittee has reviewed literally thousands of documents 
and interviewed countless witnesses to learn more about the con- 
sumer practices of the five largest pay-TV providers. This includes 
Comcast, Charter, Time Warner Cable, DISH Network, and 
DirecTV. Together, these companies serve more than half of all 
American households and nearly three-quarters of those who pay 
for television programming. 

Today’s hearing will focus on those companies’ billing and cus- 
tomer service practices. Our joint report^ outlines troubling find- 
ings about the practices of two cable companies that have consist- 
ently failed to provide refunds to customers who they know they 
have overcharged, including thousands of people in my home State 
of Ohio. I will talk about those findings in a moment. The second 
is a report issued by Senator McCaskilP on a number of issues of 


^The staff report appears in the Appendix on page 85. 

2 The report issued by Senator McCaskill appears in the Appendix on page 101. 

( 1 ) 



2 


interest to consumers: how pay-TV companies disclose their prices, 
what these fees are for, and how they teach their employees to 
interact with and retain customers. 

And without objection, these reports will be made part of the 
record. 

During the course of the Subcommittee’s investigation, we discov- 
ered something about refunds that, frankly, I found hard to believe. 
As anyone with a cable or satellite subscription knows, when your 
bill arrives every month, it often has a long list of charges on it. 
I have a bill here in front of me. It is a pretty complicated bill. A 
base charge for the TV package, maybe $10 extra per month for 
HBO, and equipment fees and surcharges for the set-top boxes that 
you rent. 

Given how many millions of people get television service from 
these companies, it is inevitable that from time to time a customer 
will wind up getting charged for something by mistake. That hap- 
pens. The same thing, by the way, happens in the grocery store 
checkout line sometimes. It has happened to me. Mistakes hap- 
pen — and we understand that. What matters in life is how you own 
up to your mistakes and make things right. What we discovered is 
that some cable and satellite companies are better at doing that 
than others. 

All of the companies before us have ways of identifying over- 
charges to customers or preventing them from happening in the 
first place. But what happens when they find out they have been 
overcharging someone for equipment the customer does not actu- 
ally have? The first thing to do, of course, is take it off the cus- 
tomer’s bill going forward. All the companies before us know to do 
that. But not all of them bother to go back and figure out when 
the overcharge started, calculate how much they owe the consumer, 
and give them a refund. 

During the time period examined by the Subcommittee, Time 
Warner Cable and Charter Communications — who have just re- 
cently merged with each other — made no effort to trace equipment 
overcharges they identified and provide refunds to their customers. 
Instead, their practice has been to just pocket the past overcharges. 

To understand the scale of this problem, we asked Time Warner 
Cable for specific numbers about overcharges in my home State of 
Ohio. Here is what we found: During the first 5 months of 2016, 
this year. Time Warner Cable overbilled up to 11,000 customers in 
Ohio, and those overcharges totaled over $100,000. Time Warner 
Cable further estimates that, throughout last year alone, it over- 
billed 40,000 Ohio customers with overcharges of more than 
$430,000. And rather than correct the mistake by refunding the 
overcharges, the company just kept the money. In my view, that is 
a ripoff of Ohio consumers, and I will be asking the company today 
how they are going to fix it. 

Specifically, when Time Warner Cable discovered the over- 
charges, it only dealt with the problem prospectively. It took erro- 
neous charges off customers’ bills going forward, but did not pro- 
vide any backward-looking refunds and did not even provide notice 
to customers so they could investigate the problem themselves. 
They just kept the money. Based on data provided to the Sub- 
committee, Time Warner Cable will overbill its customers nation- 



3 


wide an estimated $2 million for equipment charges in 2016 and, 
even after discovering these billing errors, will fail to do the work 
required to provide a full refund. We will talk about that. 

Time Warner Cable has recently been acquired, as I said, by 
Charter Communications. So I am hopeful the new company will 
work quickly to fix this problem. 

But Charter has had problems of its own. Until August 2015, the 
company did not run any systematic audits to reconcile its billing 
records with equipment records. That means overcharged cus- 
tomers could not even receive a prospective correction of their bill 
unless they spotted the problem themselves and contacted Charter. 
Just recently. Charter began taking steps to identify equipment 
overcharges currently on its system. But even though it has identi- 
fied overcharges and removed erroneous charges from future bills 
since August 2015, until today. Charter has not provided any re- 
funds or notice of the problem to consumers — just like Time War- 
ner Cable. 

It does not have to be this way. Our investigation revealed that 
Comcast, DirecTV, and DISH have had better practices. Comcast 
and DirecTV provide automatic refunds or credits to customers who 
have been overcharged by their billing systems, while DISH’s bill- 
ing system is designed and apparently has been successful in pre- 
venting any of these types of overcharges from occurring in the 
first place. So feasibility, in my view, is not a good excuse for fail- 
ing to refund customers when they have been overcharged. 

We do have some good news to report today. As a result of our 
investigation. Charter and Time Warner Cable have taken steps to 
improve their practices. Time Warner performs a monthly audit to 
find overcharges. Going forward, the company will provide an auto- 
matic 1-month credit to all customers for each piece of overbilled 
equipment or service, and it will provide notice to overbilled cus- 
tomers so they can determine whether to request a credit or a re- 
fund. That is a good start. But it does not make all customers 
whole. Time Warner Cable has not yet committed to do anything 
for the 40,000 Ohio customers, for instance, who were overcharged 
last year. And we will get into that discussion later today. 

Charter has announced that starting today it will provide a 
1-year credit to all affected consumers. That, of course, goes further 
to make customers whole, but what would be better is simply to 
ensure that customers receive the full refunds that they are owed. 

Senator McCaskill’s report shows that Americans are often un- 
happy with their cable and satellite service. Questionable customer 
service techniques and confusion surrounding billing practices have 
led consumers to feel mistreated. I support her effort to get to the 
bottom of these issues, and I believe that the best solution to the 
problem of poor customer service is more competition in the pay- 
TV industry. Regulations have their place, but what is really need- 
ed is for consumers to have a more options — more competition in 
the market. If you do not like your television service provider, you 
should be able to choose a different provider that suits your needs 
and suits your preferences, and Senator McCaskill and I are both 
interested in continuing to examine how the industry can be im- 
proved to create more choice for consumers. 



4 


I want to thank Senator McCaskill for her hard work on this. 
She has always been a stalwart friend of consumers, as I said ear- 
lier. She and her staff have worked with us in a professional and 
productive way to make today possible. 

With that, I would like to turn to Senator McCaskill for her 
opening statement. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator McCaskill. Thank you, and I want to thank you. Chair- 
man Portman, for allowing me to pursue, along with you and your 
staff, this investigation. I think that we can feel great about the 
fact that just this investigation and hearing have caused good 
things to happen for consumers as it relates to pay-TV. As you in- 
dicated, we have had a change just from the investigation. Both 
Charter and Time Warner agreed to issue credits for thousands of 
customers who were overbilled, and Comcast has provided addi- 
tional guidance to its retention representatives of allowing cus- 
tomers to cancel without an argument. So we can already claim 
some small victory as a result of these investigations and this hear- 
ing today. And I think this is an important area for us to continue 
to look at. 

It is amazing to me, when we began asking for input, the volume 
and passion of input we got from people about how they feel like 
they are mistreated by their pay-TV provider. And this morning, 
for the first time, our Nation’s largest cable and satellite companies 
are testifying together before us about their customer service and 
billing practices. They are here because this Subcommittee has 
broad jurisdiction to investigate issues which affect the American 
people. I tried to have this hearing as the Chairman of the Con- 
sumer Protection Subcommittee, and I got no cooperation from any 
of these companies in connection with that hearing in the later 
months of 2014. And so I made a determination then that I was 
not going to give up and that we were going to stay on this, and 
I am really grateful, as I say. Chairman Portman, for your agree- 
ment to allow this investigation to go forward. 

The five companies here today provide video services to more 
than half of all American households. They enable more than 71 
million subscribers and their families to receive news, entertain- 
ment, and other programming. And while we may love watching 
our shows, we do not love our cable and satellite bills, and we hate 
dealing with the cable and satellite companies. Although the com- 
panies have made some gains in the last year, paid TV providers 
remain among the most disliked industries in America. This year, 
a survey of consumers found that more than 20 percent of the peo- 
ple who had interacted with TV providers reported having a bad 
experience during the previous 6 months, the highest level of any 
industry. 

So how did I begin down this road? Well, it was with a personal 
experience. I called one of my providers and asked questions about 
my bill. And in the process of that conversation, I learned — this 
was over 2 years ago — that there was a $10 charge on my bill for 
a certain service that now was included in the basic package. And 
I said, “Well, so I am paying $10 that I do not have to?” And the 
person on the other end of the line kind of said, “Yes, you are pay- 



5 


ing $10, and you do not have to pay it.” And I said, “Well, were 
you going to tell me this?” And they said, “Well, no. You have to 
call in and ask.” That is exactly the kind of “hide the ball” that in- 
furiates people. 

So if I had not called in and asked, that $10 could still be on my 
bill today based on the billing practices of the companies rep- 
resented at this hearing. 

So we have done a huge investigation, and I have reviewed a lot 
of material, and my staff has, and I have consumed a lot of infor- 
mation about this. So I decided 2 days ago I would take another 
spin, because now I know a lot. Now I know the difference between 
a customer service representative and a retention specialist. Now 
I know what to say and how to say it. 

So 2 days ago, I called one of my providers, and on my website, 
McCaskill.Senate.gov, people can listen to the recording of this con- 
versation. And, in fairness, because I do not think this is nec- 
essarily one company versus another, I am not going to talk about 
which company it is, nor will the recording. And I am not going to 
read here nor on the recording will I give all my personal informa- 
tion that I was asked to give when I called. But here is how the 
conversation went, the first part of it, until they got me to that 
magic retention specialist. 

“Hello, and thank you so much for calling. Can I have your 
name, please?” 

“My name is Claire McCaskill.” 

“Can you spell that for me, please?” 

I proceeded to spell it. I proceeded to give the representative my 
service address. I proceeded to give her the name on the account 
and say that that was my husband’s name. And she asked what 
my relationship was to the account holder, and I said it was my 
husband. And then the woman said, “OK. And how can I help 
today?” 

I said, “I would like to have you remove — there is a fee on 
here — I am not sure how it got on here — for a protection plan. I do 
not recall buying that or being asked about it, and I would like to 
have it removed.” 

Now she wants to get my information about my account and my 
active credit card to make sure I am the person that I say I am. 
So she goes through what credit card I have on file. Then she says, 
“All right. So you said you are seeing a charge for the protection 
plan, and you would like to know what it is for.” 

I said, “No. I would like to take it off.” 

“Oh, you would like to take it off?” 

“Yes.” 

“All right. But you are aware that basically the protection plan 
covers equipment upgrades every 2 years, and if you lose your 
equipment, then we will replace it for you at no charge.” 

I said, “Well, are you saying that the equipment I have in my 
house now is mine, or is it yours?” 

“Well, it is ours, but basically if there are any issues — say, for 
example, spills or accidentally the cables get cut, then we will re- 
place that for you.” 

I said, “Well, yes, but let’s just say if it is your equipment and 
something goes wrong with it, don’t you have to fix it anyway if 



6 


I am going to be able to get the service I am paying for since you 
own the equipment?” 

“Well, let’s say if the remote fails or stops working. The protec- 
tion plan on the account will then fix that free of cost.” 

I said, “Well, what would that cost if the remote quit working? 
It is your remote that you own. What would it cost to get it fixed 
if I did not have the protection plan?” 

The woman says, “Well, information on that is actually done in 
our equipment department. So I would like to connect you there for 
more information.” 

I said, “No, no, no, no.” Because I knew better, right? “No, no, 
no, no. I do not want to do that because if you do that, I have to 
wait and tell the story all over again. I just want to find out why 
I cannot get you to take off the $7.99 for the protection plan.” 

“I am not saying I am not able to take it off. I am just letting 
you know the benefits you get with the protection plan.” 

“I understand. I think I understand. I think, frankly, it’s kind of 
a ripoff because you own all the equipment, and I think you have 
to fix the equipment since you own the equipment. And if you can- 
not fix the equipment, then I could not get the service, and then 
I would not pay for the service, and I would definitely go to another 
provider. So what I am asking is, will you just disconnect it? I do 
not want to pay the $7.99. I do not even know how it got on my 
bill. I think you just started putting it on my bill, and I was not 
paying close enough attention.” 

“All right,” she says. “But if I actually have the protection plan 
taken off, there will be a $10 disconnection fee.” 

“It would be a $10 disconnection fee for me to quit paying the 
$7.99 every month?” 

“That is correct.” 

“And it is a one-time disconnection fee? ” 

“Yes, it is one time.” 

“And what am I paying for? ” 

“Paying for?” she says. 

“Yes, what am I paying for? For you to just quit charging me for 
the service, I have to pay you $10?” 

“Well, no. Basically” 

And then I say, “I think what we ought to do probably, I think 
maybe now it is time for me to switch carriers. If you are going to 
charge me $10 to quit charging me for something I do not want 
anymore, I think it is time to switch carriers.” 

“All right. Well, basically that is just the policy. So once I take 
off the protection plan charge, it will be automatically on your ac- 
count.” 

“OK. So what you are saying is if I want to cancel $7.99 that you 
have been getting every month for the protection plan, you are 
going to charge me $10 to do that? You have no choice?” 

“I have no choice.” 

“You cannot waive that? ” 

“It is policy. That is correct.” 

“Do you have discretion to give me a one-time credit of $10 to 
do away with that? ” 

“I am really sorry.” 



7 


“I do not really think you want to lose me as a customer, do you, 
over $10?” 

“Well, we do value your business, but it is just the policy here. 
So once I take it off, then there will be the $10 charge.” 

“And there is nothing you can do about that? You do not have 
the option to waive? ” 

And she says, “No, I do not.” 

So then, finally, I said, “Well, who could waive the $10?” 

She says, “Well, I would have to give you to the retention spe- 
cialist. And I am not really sure how it works in that department.” 

So then she switched me over to the retention specialist. 

Now, this is typical. And, more importantly, when she switched 
me to the retention specialist, I knew what to say. I knew to keep 
threatening that I was leaving, to keep threatening I was leaving, 
not give up, keep threatening I was leaving. And, by the way, it 
was a long call. Even when we edited it to take out some of the 
things that are not personal, it was longer than 15 minutes, and 
at the end of the call, I managed to get the $7.99 off. I was told 
by the retention specialist I never should have been charged the 
$10. And, by the way, I got so mad and “escalated,” as it is called 
in the business, that the retention specialist ended up giving me 
$10 off a month for 12 months. 

Now, they were looking at a screen that told them all kinds of 
information about me, including the fact that I am a pretty good 
customer. My bill is pretty high. 

So I say this because I think this is what the industry maybe 
does not completely understand in terms of the anger. We found 
that customers are being charged a host of fees that are not in- 
cluded in advertising pricing, some of which are for programming 
that used to be included in a customer’s video package. 

We also found that just as many customers have long believed 
some of these fees, like high definition (HD) and the digital video 
recorder (DVR) service fees, are not really a true reflection of the 
cost to the company of the service but, rather, are based on the rev- 
enue goals of the company and the price a customer is willing to 
stomach. In fact, some of these fees are charged to old customers 
while new customers get the same services free of charge. Existing 
customers may not be informed of this. And when they finally fig- 
ure it out, they have to call and complain to get it taken off. 

We found that customers who called for help on their accounts 
face agents whose job it is not just to solve the customer problems 
but, in fact, to sell them additional services. At one cable company, 
even when the customer called in to ask about why their bill was 
going up, the company told them, “[t]he price adjustment brings 
with it an opportunity to upsell customers.” And these agents are 
compensated, in part, on their ability to sell you more. 

Then if the customer decide they want to cancel their service, 
they have to jump through more hoops. Although all the companies 
here today allow people to sign up for service or upgrade their serv- 
ice online, none of them provide customers an option to cancel serv- 
ice online without speaking to a company representative. And if 
they call, they have to speak to salespeople, like the one I spoke 
to this week, who are trained to prevent the customers from can- 
celing and hopefully selling you more product. Even when cus- 



8 


tomers say they do not want to have this discussion, the agents are 
expected to ask questions about why the customer is canceling. 

Customers trying to save money by lowering their level of service 
are often routed to the same agents and should be prepared to ne- 
gotiate aggressively. We found evidence that these companies train 
their agents to question customers’ decisions to drop channels and 
make offers in a “top-down” fashion so the customer must repeat- 
edly push and push and push to get the best deal. 

Finally, we found that two of the companies have failed to pro- 
vide their customers with notice that they have been overcharged 
or refunded of past overcharges. As the Chairman pointed out, 
thousands of people in our States have been impacted by that. The 
numbers for Missouri, Time Warner overbilled 4,232 Missouri cus- 
tomers last year for a total of $44,152, and Charter estimates that 
it has annually overcharged approximately 5,897 Missouri cus- 
tomers a total of $494,000 each year. 

I want to acknowledge the cooperation we have received from all 
the companies represented before us today as well as acknowledge 
the commitments they have made during the process of this inves- 
tigation to improve customer service. Unfortunately, our investiga- 
tion suggests that there is a long way to go, as did my conversation 
with one of my providers just 2 days ago. 

I thank the witnesses for their testimony and look forward to the 
opportunity to ask you questions. 

Senator Portman. Thank you. Senator McCaskill. 

We will now go to our panel of witnesses, and we appreciate you 
all being here. 

This morning we have with us Tom Karinshak. He is the Senior 
Vice President of Customer Service for Comcast where he oversees 
all call center operations and other customer service channels. 

We have with us John Keib. John is the former Executive Vice 
President and Chief Operating Officer (COO) of residential services 
for Time Warner Cable where he was in charge of customer service, 
service delivery, technical support, marketing, and sales. 

We have Kathleen Mayo with us, who is the Executive Vice 
President of Customer Operations at Charter Communications, 
where she is responsible for Charter’s customer care organization. 

We have Rasesh Patel, who is the Senior Vice President of Prod- 
uct Management for AT&T Entertainment Group, where he is re- 
sponsible for product strate^ and development for DirecTV. 

We have Kathleen Schneider with us, who is Senior Vice Presi- 
dent of operations for DISH Network, where she oversees customer 
service for all DISH and Sling TV subscribers nationwide and man- 
ages dish’s call centers and business process improvement oper- 
ations. 

Again, we appreciate you all being with us this morning, and we 
look forward to your testimony. It is the custom of the Sub- 
committee to swear in our witnesses, so at this time I would ask 
you all to please stand and raise your right hand. Do you all swear 
that the testimony you are about to give before this Subcommittee 
will be the truth, the whole truth, and nothing but the truth, so 
help you, God? 

Mr. Karinshak. I do. 

Mr. Keib. I do. 



9 


Ms. Mayo. I do. 

Mr. Patel. I do. 

Ms. Schneider. I do. 

Senator Portman. Thank you. Let the record reflect that each 
witness answered in the affirmative. 

All of your written statements will he made part of the record in 
their entirety. I would ask you to keep your oral testimony to 5 
minutes today. 

Mr. Karinshak, we would like to hear from you first. 

TESTIMONY OF TOM KARINSHAK, i SENIOR VICE PRESIDENT, 
CUSTOMER SERVICE, COMCAST CABLE 

Mr. Karinshak. Thank you. Chairman Portman, Ranking Mem- 
ber McCaskill, and Members of the Subcommittee, my name is 
Tom Karinshak, and I am the Senior Vice President of customer 
service at Comcast Cable. Thank you for the opportunity to be here 
today, and I also want to thank your staff for the courtesies ex- 
tended to us throughout this review. 

I understand why we are here. Comcast and the industry as a 
whole have not always made customer service the priority it should 
have been. Our ability to address customers’ needs in a timely 
fashion has been an issue. Our bills have not always been simple 
to read, and the range of choices and prices we have offered have 
not always provided customers with the options they want. I am 
sorry about that history. 

At Comcast, we have committed to our customers that we will 
change it, and we are taking steps to do just that. I want to reaf- 
firm that commitment to you all today and to outline some of the 
actions that we are taking. 

When I started this job, I made a decision to regularly spend 
time on the phones and in the stores with our employees and with 
our customers. That is the front line. That is the place where cus- 
tomer views about Comcast are shaped. When you contact us to get 
new service, you want to speak with someone who listens to what 
you say and who understands all of our product options. You want 
to know the full price, and you want time to change your mind if 
what you order is not exactly what you need. 

When you get bills from us, you want them to be easy to read, 
and you do not want to see surprises or changes that you do not 
understand. When you call with a question or a problem or to tell 
us we made a mistake, you want polite and responsive service. And 
you want the issue resolved the first time if at all possible. And if 
you move out of our service area or decide to choose service other 
than ours, you want to be able to do so without delays and without 
hassle. 

We have listened to what you have said. Yesterday I met with 
some of our front-line employees in a local store here in the D.C. 
area, and I took some calls directly from our customers, and I was 
heartened by what I experienced. 

I have submitted a longer statement for the record, and I will not 
repeat much of it here. But I do want to tell you just a few of the 


^The prepared statement of Mr. Karinshak appears in the Appendix on page 49. 



10 


key components of our efforts to improve our customer service and 
to provide a better customer experience. 

First, we are investing in additional training and new technology 
for all of our employees. We are committed to ensuring that when 
our customers speak to Comcast representatives, they are speaking 
to representatives that have received comprehensive and consistent 
training. 

On the technology side, we have rolled out a new cloud-based 
platform that gives customer service representatives a better, holis- 
tic view of the customer’s account history so that customers do not 
need to keep repeating the same information when talking to some- 
body new. 

Second, we are reassessing policies and fees and simplifying our 
bills to improve the overall customer experience. For example, we 
have eliminated change of service and other fees, and we now allow 
customers to return equipment free of charge through our partner- 
ship with the United Parcel Service (UPS). We offer all customers 
a 30-day money-back guarantee, and in response to the Subcommit- 
tee’s concerns, we have reaffirmed in a policy statement sent to all 
of our retention specialists that we expect them to promptly facili- 
tate a disconnect for a customer who is not interested in answering 
questions. 

Third, we are giving all customers better access to products and 
services that work best for them. We have listened to our cus- 
tomers and are developing new products that better suit their 
needs. For example, we recently developed a cutting-edge XI plat- 
form which has completely enhanced and revamped our customers’ 
entertainment experience. And we have expanded our free on-de- 
mand programming to offer our customer more choices than ever 
before. 

And, finally, we are measuring all of our employees on customer 
satisfaction. Our compensation plan for front-line employees is now 
tied directly to the customer experience. In fact, the compensation 
for all company employees, including our company’s top executives, 
depends in part on these customer service scores as well. 

Comcast will spend an incremental half billion dollars this year 
alone on improving the customer experience. As part of that initia- 
tive, we are creating more than 5,500 new customer service jobs 
over the next 3 years, including positions that we have already 
filled at our new call centers in Albuquerque, New Mexico, and in 
Tucson, Arizona. 

Having spent over 6 years in the Army myself, I am particularly 
proud of the fact that we are looking to fill many of these positions 
with our Nation’s veterans and their families. 

We believe these and other steps we have taken to improve our 
customer experience are making a real difference. 

Thank you again for the opportunity to testify, and I am happy 
to answer any questions that you may have. 

Senator Portman. Thank you, Mr. Karinshak. Mr. Keib. 



11 


TESTIMONY OF JOHN KEIB,i FORMER EXECUTIVE VICE PRESI- 
DENT AND CHIEF OPERATING OFFICER, RESIDENTIAL SERV- 
ICES, TIME WARNER CABLE INC. 

Mr. Keib. Chairman Portman, Ranking Member McCaskill, other 
Members of the Subcommittee, good morning. My name is John 
Keib, and I am here today to testify on behalf of legacy Time War- 
ner Cable. Thank you for the opportunity to participate in this 
hearing. 

As you know. Time Warner Cable recently merged with Charter 
Communications and Bright House Networks to form a new com- 
pany. My role at Time Warner Cable ended when the parties com- 
pleted these transactions; I am no longer employed by Time War- 
ner Cable or Charter. As such, I am testifying today as a former 
Time Warner Cable executive, but also as a private citizen. 

My most recent position at Time Warner Cable was Executive 
Vice President and Chief Operating Officer for residential services. 
In this role, I led the service delivery, customer care, marketing, 
and sales operations for the company’s residential service. To the 
extent that questions arise relating to the future of Time Warner 
Cable and Charter, I will defer to Charter’s witness. Kip Mayo. 

Legacy Time Warner Cable serves approximately 15 million cus- 
tomers receiving video, Internet, or telephone services in 29 States 
ranging from Maine to Hawaii. We employ thousands of customer 
service representatives and field technicians whom we train, first 
and foremost, to serve our customers. 

Let me begin by acknowledging that we are well aware of some 
of the issues that will be discussed by the Subcommittee today. 
Those of you who live in a Time Warner Cable area have probably 
seen our most recent ad campaign in which we acknowledge — in- 
deed highlight — prior service challenges before explaining the steps 
we are taking as a company to address those historical short- 
comings. 

That campaign is the culmination of efforts made, during my ten- 
ure at Time Warner Cable, to improve our customer service per- 
formance in order to provide the best customer experience possible. 
Beginning in 2013, under an internal strategy we called “Winning 
on Service,” Time Warner Cable embarked on an aggressive plan 
to improve its customer service and took several steps toward that 
goal. We invested heavily in our network. We made several tech- 
nology augmentations for broadband and video. We also initiated 
an ambitious plan to reshape our customer service performance by 
investing in our greatest and most important asset — our employ- 
ees. We sought to make service the differentiator and to become 
the best service provider not just within the telecom space, but 
within any industry. 

Our goal is to keep customers, and we accomplish that goal by 
keeping them happy. To do this, we train our customer service rep- 
resentatives to provide excellent care to our customers. Upon hir- 
ing, our representatives receive 11 weeks of hands-on training, as 
well as weekly ongoing training and coaching sessions with our su- 
pervisors. These coaching sessions allow our representatives to 
learn from the actual calls they handle. Our focus on customer 


^The prepared statement of Mr. Keib appears in the Appendix on page 57. 



12 


service has made a difference, as more than four in five customers 
report they are satisfied with their interaction with Time Warner 
Cable. And our surveys suggest that our customers are becoming 
increasingly satisfied. 

We have made great strides in addressing customer issues more 
quickly and efficiently. We have done this by improving our phone 
service levels through enhanced training and better staffing, im- 
proving our product and service performance, and introducing ap- 
pointment-based call-backs, which allow customers to schedule call- 
backs from Time Warner Cable at times that best work for them. 
As a result of these efforts, our total call volume is down. Over the 
past 3 years, the number of calls fielded by our customer service 
representatives decreased by 12 million, which is a testament to 
better and more efficient customer service. 

One measure of this improved customer service is known as “one- 
touch resolution” — or the percentage of calls that are managed by 
a single agent. Recent internal reports show that we achieve one- 
touch resolution in nearly 94 percent of the calls we handle. 

In addition. Time Warner Cable began offering industry 1-hour 
service and install windows, and in the first quarter of this year, 
our technicians were on time for these appointments 99 percent of 
the time. We also significantly reduced by 1.6 million the number 
of times a Time Warner Cable technician needed to visit a cus- 
tomer’s home to handle a repair. 

Are we there yet? No. Making such changes at a company our 
size is no small feat, and the desired changes cannot all happen at 
once. Still, the evidence suggests that our efforts are starting to 
pay off. In the latest American Customer Satisfaction Report, Time 
Warner Cable was ranked the fourth-best Internet provider. That 
is up from the 13th position 2 years previously. 

Although we did not have enough time to fully execute our plan, 
I am proud of the early results just as I am most proud of our tech- 
nicians and customer service agents who together are pursuing a 
single mission of winning on service. Moreover, I am very confident 
that Charter holds the same core tenets about prioritizing customer 
service and will continue to improve the customer service experi- 
ence. 

I look forward to answering any questions you have today about 
Time Warner Cable, and I would like to thank you for having me 
here today. 

Senator Portman. Thank you, Mr. Keib. Ms. Mayo. 

TESTIMONY OF KATHLEEN “KIP” MAYO,i EXECUTIVE VICE 

PRESIDENT, CUSTOMER OPERATIONS, CHARTER COMMU- 
NICATIONS, INC. 

Ms. Mayo. Thank you. Chairman Portman, Ranking Member 
McCaskill, and Members of the Subcommittee. I appreciate the op- 
portunity to testify here today. My name is Kathleen Mayo, and I 
am Charter’s executive vice president of customer operations. 

I am here to talk about the significant progress we have made 
improving the customer experience at Charter since the company’s 


^The prepared statement of Ms. Mayo appears in the Appendix on page 60. 



13 


2009 bankruptcy and more especially since its change of leadership 
in 2012. 

As a result of its history, Charter’s infrastructure was in serious 
need of capital investment. The company’s financial situation 
meant that Charter had underinvested in repairs, which kept the 
product from performing reliably. At the same time, it had tried to 
cut costs by outsourcing thousands of customer service jobs over- 
seas. 

Since Tom Rutledge became the Chief Executive Officer (CEO) in 
2012 and brought in a new leadership team, we instituted a new 
playbook for success that included streamlining our video products, 
adding value to those products, and delivering the fastest minimum 
broadband speeds, all at highly competitive prices, with a focus on 
improving customer service. 

Our efforts over the last 3 or 4 years to improve customer serv- 
ice, have included insourcing customer and field service positions, 
which created thousands of American jobs. We have invested sig- 
nificantly in training our employees to be responsive to the needs 
of the customer. 

Since 2012, we have hired over 7,000 employees, a 40-percent in- 
crease, and the majority of those roles are customer-facing posi- 
tions, many of which were brought back from overseas. To date, 
nearly 90 percent of our customer calls are handled onshore and 
in-house, and 95 percent of our in-home service visits are per- 
formed by Charter technicians rather than by third-party contrac- 
tors. 

We are committed to locating our facilities in the communities 
we serve, most recently opening a $16 million state-of-the-art cus- 
tomer operations center in St. Ann, Missouri. 

As part of our transaction with Time Warner Cable, Charter ex- 
pects to hire 20,000 American workers, many of whom will fill cus- 
tomer service jobs that are currently outsourced to call centers lo- 
cated in other countries. This approach has given us greater qual- 
ity assurance in our representatives’ interactions with customers. 
Our representatives engage in conversations with our customers to 
understand their unique needs in order to properly assist them. We 
do not follow canned scripts. 

To improve the customer experience, we also have taken steps to 
simplify our bill by eliminating common industry fees, and we have 
expanded self-service capabilities. As a result of these steps and 
the $7 billion we have invested in our network, customer service 
calls have declined 25 percent since 2013. When our customers do 
need assistance, we have been able to resolve their issue on the 
first call 80 percent of the time. 

Those high-quality customer interactions are growing our cus- 
tomer base. In a very competitive environment, we have added 
more than 1 million customer relationships since the beginning of 
2012, growing our total customer base by 18 percent, despite hav- 
ing no early termination fees to prevent customers from leaving us. 
Our churn is down. Our existing customers are staying with us 
longer, and our customer satisfaction has improved by 12 percent. 
We are pleased with our accomplishments to date and believe the 
results are beginning to show. But we also know that there is still 



14 


much work to do in order to provide our customers with the excel- 
lence in service that they expect and that they deserve. 

To eliminate accidental overcharges for video equipment, Charter 
instituted checks and balances that create controls in our order 
entry systems to ensure we get each order right. Our recent audit 
of video equipment determined our billing was 99.4 percent accu- 
rate. Out of 11 million boxes, we found approximately 63,000 
boxes — less than 1 percent — where customers were overbilled. 

While 99.4 percent is a high accuracy rate, it remains unaccept- 
able. No accuracy rate short of 100 percent is acceptable. As a re- 
sult, we are reconciling every single account every single day to en- 
sure our billing is accurate. We are in the process of notifying over- 
charged customers, and we are issuing them a 12-month credit. 

In conclusion, we have made significant investments to improve 
our network, we have streamlined our products, we have simplified 
our pricing, and we have insourced thousands of jobs to strengthen 
our American workforce. At Charter, we are continuing to work 
every day to improve and show our customers that we are com- 
mitted to providing superior customer service. 

Thank you. 

Senator Portman. Thank you, Ms. Mayo. Mr. Patel. 

TESTIMONY OF RASESH PATEL/ SENIOR VICE PRESIDENT, 

PRODUCT MANAGEMENT, AT&T ENTERTAINMENT GROUP 

(DIRECTV) 

Mr. Patel. Good morning. Chairman Portman, Ranking Member 
McCaskill, and Members of the Subcommittee. My name is Rasesh 
Patel, and I appreciate this opportunity to speak with you, on be- 
half of AT&T and DIRECTV, about our commitment to customer 
service. The hallmark of our brand has been to offer customers the 
very best entertainment experience through our technology, unique 
content offerings, and good customer service, and we are proud of 
that heritage. But we need to get better, and we are working hard 
to do so. 

To that end, we need to complement our great product. I think 
we have a phenomenal product that offers customers the first dig- 
ital experience, Sunday Ticket, first to go to HD. But sometimes 
that great product is not complemented with great customer experi- 
ence, and it frustrates our customers. And so to that end, in 2012, 
I started a group that focused on being champions for the customer 
inside the organization, reporting directly to the CEO. And our goal 
was not just customer service. Our goal was to relook at the entire 
business through the customer’s eyes, to conduct a significant 
amount of analysis on what exactly customers are going through, 
and to be the internal voice of the customer in the organization so 
that as decisions are being made and as policies are being set, the 
voice of the customer is represented, and to be a champion for the 
change and really see improvements all the way through. To that 
end, we have made a lot of progress, but we have a long way to 
go. 

And so this is a very personal issue for me. I asked our CEO to 
really lead this organization, so I am glad to be here today. 


^The prepared statement of Mr. Patel appears in the Appendix on page 67. 



15 


Our commitment to serving customers and giving them more 
value and choices has never been stronger. We recently announced 
in March plans to launch over-the-top services that will provide 
customers flexibility and increase choices in lower-cost offerings to 
customers. It will essentially allow them to enjoy our content dis- 
tributed over the Internet in a much more simple business model 
and offering. 

DirecTV has ranked higher in customer satisfaction than cable 
for 16 years in a row, but we recognize that we need to raise the 
bar in this ever-evolving competitive landscape, given rising con- 
tent costs. If customers are going to pay more for the service, they 
can, should, and will expect more. We believe service is an essen- 
tial component of our success and we have, accordingly, devoted 
and will continue to devote significant resources toward our goal of 
delivering a superior customer experience. 

I have been with the combined AT&T and DirecTV company for 
15 years in a number of different roles, and as you noted Mr. 
Chairman, I am currently Senior Vice President of Product Man- 
agement, but from 2012 until AT&T’s 2015 acquisition of DirecTV, 
I served as Senior Vice President of Customer Experience. In that 
role, I led DirecTVs proactive, enterprise- wide, customer-centric ef- 
fort to improve the experience across all customer touch points. 

The initiative began with a comprehensive evaluation of all our 
policies and practices. We conducted detailed research on exactly 
what the customer was going through, and we have shared much 
of that research with the Subcommittee. We did an analysis on 
operational data in order to really prioritize our efforts to what was 
most important to customers. 

We have invested hundreds of millions of dollars in that cus- 
tomer experience initiative, which has produced real results for our 
customers. We have eliminated 18 million phone calls per year to 
our call centers over the last 3 years, which demonstrates cus- 
tomers are experiencing fewer issues. We have reduced over 
300,000 service truck rolls per year, which I also look at as 300,000 
fewer times someone has to take a day off of work in order to meet 
a service technician. 

We have reduced complaints to our Complaint Resolution Center 
by 44 percent, and we introduced a new simplified bill that clearly 
showed customers what the full retail price of their services was, 
what the discount amount was, and was very transparent every 
month about communicating when that discount expires. 

We made it a point on page 1 of that bill to proactively identify 
anything that has changed from the previous month so customers 
do not have to hunt for that information. 

DirecTV also maintains a dedicated team to proactively identify 
and address billing errors, and it is a continually learning process. 
If we find an issue that becomes part of a continuously monitoring 
inquiry, we will look for that problem going forward. It is our policy 
to proactively address billing errors, to notify customers that we 
made an error, and to reimburse affected customers. And we even 
do so if that person is no longer a customer with us. We will go 
back and credit their account. 

But we are not done yet. We have plenty of room for improve- 
ment, and in that regard, AT&T and DirecTV will spend more than 



16 


$1 billion toward enhancing the customer experience from 2016 to 
2017. While we do take pride in the progress that we have made 
over the past 3 years, we know that customer satisfaction is a 
never-ending journey, and we can, should, and need to do better. 

In that regard, I sincerely welcome the Committee’s input. 
Through this process, I have run across a couple of things that I 
myself have discovered that will drive change in our organization. 
And we are confident that as a combined company we will further 
enhance our ability to provide our customers with the very best 
products and services that they deserve. 

So I thank you for the opportunity to appear here today, and I 
look forward to answering your questions. 

Senator Portman. Thank you, Mr. Patel. Ms. Schneider. 

TESTIMONY OF KATHLEEN SCHNEIDER, i SENIOR VICE 
PRESIDENT, OPERATIONS, DISH NETWORK, L.L.C. 

Ms. Schneider. Chairman Portman, Ranking Member 
McCaskill, and Members of the Subcommittee, my name is Kathy 
Schneider, and I am the Senior Vice President of operations for 
DISH Network. 

In the 1980s, DISH’s three founders decided that consumers 
should have an affordable alternative to cable. We launched our 
service in 1996 and were successful in reinventing television dis- 
tribution and providing meaningful competition within the pay-TV 
industry. DISH is now the Nation’s fourth-largest pay-TV provider 
with about 14 million subscribers. We have 18,000 employees, plus 
relationships with over 6,000 independent retailers, most of which 
are small businesses providing community storefront operations for 
our customers. There are 146 of these retailers in Ohio and 167 in 
Missouri. 

We are proud that DISH is the only provider of local broadcast 
channels in all 210 U.S. media markets, ensuring that even the 
most rural customers receive the same high-quality television as 
customers in more urban areas. 

For DISH’s customer service, the issues we will discuss in this 
hearing are complex, but here is the simple truth for DISH. Our 
success as a business depends on satisfied customers. We have 
spent the last two decades working to provide a first-rate enter- 
tainment experience and making our customers happy. Happy cus- 
tomers understand and see the value of our products and services, 
understand our bills, receive a seamless installation of reliable 
products, and receive responsive repairs and service changes. 

At DISH, our sales, installation, customer service, billing, prod- 
uct development, and programming teams are constantly working 
hand in hand to make sure we satisfy these customer expectations. 
And we have received some outside recognition for these efforts, in- 
cluding an A-plus rating from the Better Business Bureau (BBB), 
J.D. Power awards for customer satisfaction for 4 years running, 
and a top ranking in several categories by the American Customer 
Satisfaction Index, including Lowest Customer Complaints. 

We diligently track the latest customer pain points and adjust 
our policies, procedures, training materials, and subscriber offer- 


^The prepared statement of Ms. Schneider appears in the Appendix on page 73. 



17 


ings. We make sure our agents have the necessary tools to match 
each customer with the best programming, technology, and value 
for that customer’s needs. 

When a call comes in, our policy is to resolve, prevent, and pro- 
mote. First, resolve the customer’s issue, then prevent any future 
issues, and only after that promote the value of DISH. 

We also keep innovating and coming up with the best technology 
to meet customer demand for TV anywhere, anytime. That is what 
is behind our award-winning set-top box, the Hopper, and also 
Sling TV, our groundbreaking live TV Internet streaming service. 

We are in a highly competitive business with major up-front 
costs involved in acquiring each customer to the tune of $800 per 
subscriber at DISH. It takes us 4 years of having the customer for 
us to recoup those costs, and vying for our customers are often two 
to three other cable, telco, or satellite companies. Usually, one or 
more of those competitors is a company that, unlike DISH, can 
bundle its TV offerings with broadband and phone service. DISH’s 
way of beating the bundle has to be keeping our customers satis- 
fied with the quality of our service and value of what we are giving 
them. 

Unfortunately, DISH cannot alone address two of the biggest 
overall customer complaints that we face: one, the high price of 
programming; and, two, the inability for our customers to select 
which channels they receive. The content industry needs to be a 
part of that conversation. 

The main source of rising pay television rates is the skyrocketing 
costs of acquiring programming content, mostly due to the broad- 
casters’ ever-growing demands for retransmission consent fees. Pro- 
grammers have inflicted huge price increases leading to scores of 
channel blackouts when they withhold their signals and put con- 
sumers in the middle of their negotiations with us. 

DISH and other pay-TV companies have called on Congress and 
the Federal Communications Commission (FCC) to update the out- 
dated laws that govern how TV distributors negotiate for content 
with broadcasters. Reform would go a long way in stopping black- 
outs, addressing the anti-consumer effects of forced channel bun- 
dling, and moderating pay-TV prices and perhaps even lowering 
them. 

I will end with this: While DISH is proud of its customer service 
and billing practices, we are also committed to continued improve- 
ment and constantly ask ourselves what can we do better. We are 
not perfect. We make mistakes. But we do our best to fix the mis- 
takes that happen and learn from them. We welcome the advice of 
the Subcommittee on ways that the overall service experience can 
be made better for our subscribers. 

Thank you, and I look forward to your questions. 

Senator Portman. Thank you, Ms. Schneider. I appreciate it. 

We are going to have the opportunity to ask questions from the 
panel. We have a 7-minute initial round of questions, and then we 
will do 5 minutes for the second round. Because we have a number 
of Members here, I am going to keep my initial questions shorter 
than that because I will be here until the end. 

Let me start, if I could, by saying that I really appreciate the tes- 
timony. We learned a lot, including on some issues that we may be 



18 


following up on, as I said earlier, in terms of competition and en- 
suring that people have choices. But let me zero in on this issue 
of not providing refunds to customers. 

Mr. Keib, I appreciate your being here. I know you are here real- 
ly in your capacity as a private sector individual now, not with any 
particular company but as a private citizen. And yet you were in 
charge during this time period that we looked into, which was be- 
fore Warner Cable had merged with Charter, and even going for- 
ward, some of the Time Warner practices that do not provide cus- 
tomers to get a full refund for charges they should not have in- 
curred, particularly with regard to equipment. 

So I guess my question to you would be, when you look at the 
data, 40,000 Ohio customers in 2015 were charged 430,000 bucks 
they should not have been charged, they are getting no refund for 
that. Even the first 5 months of this year, 11,000 Ohio customers 
are being overbilled over 100,000 bucks. Mistakes happen. We 
talked about that. And I mentioned, the checkout counter at the 
grocery store example of that where sometimes they make a mis- 
take, but then they correct it. And they do not say, “We are going 
to charge you less next time you come in.” They say, “We are going 
to make you good.” 

So it seems to me that the company could have looked into these 
overcharges, as other companies represented here have, and deter- 
mined, how long the customer had been billed for these charges 
and simply to provide them a refund for that. Do you agree with 
that? 

Mr. Keib. I think I agree with that. But I would, if given the op- 
portunity, like to give a quick overview of the situation that we are 
discussing and how we handle credits and refunds. 

Senator Portman. Yes, quickly, if you would. 

Mr. Keib. Sure. Well, first of all, I would like to bring up some- 
thing that did not come up, I think, when we started, which is that 
we are actually undercharging customers significantly more than 
we are overcharging them. At least that is what we found and sub- 
mitted as part of our revenue assurance program. And I do think 
that is noteworthy in the context of this discussion. 

Second, as a company, we provide over $150 million in credits a 
year to customers, and a lot of those credits are done in real time 
with our customer service agents, and many of them are done when 
we know the origination of the actual air date. And when we can 
quantify the exact customers impacted, we absolutely do provide 
notice, and we do provide the exact amount of what the actual 
credit is going to be. 

Several years ago, we built out something we called a revenue 
assurance program, and this revenue assurance program, as I 
think you may have mentioned, was really designed to find these 
kind of issues. And over time we found these issues, and what the 
revenue assurance program found as it looks to tie out whether our 
equipment is being charged properly on the accounts is that of the 
37 million pieces of equipment that we have active on our network, 
a very small fraction were being improperly billed. 

And on top of that, if you bring it down to the customer level, 
it was about, I think, 0.07 percent of customers with video equip- 
ment had an issue and 0.03 percent of our modems. 



19 


So what I said earlier about winning on service, we take it very 
seriously. And it does not really matter if it is 10,000 out of 2.5 mil- 
lion customers. That 10,000 or 11,000 is what we have to get right. 

Senator Portman. Let me interrupt you, if I could, just for a sec- 
ond. We are talking about 40,000 customers in Ohio alone in 2015 
who were overcharged. 

Mr. Keib. I apologize. 

Senator Portman. Forty thousand in Ohio alone, so you are talk- 
ing about many more thousands of that in other States represented 
around this panel. And it is easy to say, well, we undercharged 
some people, we overcharged others, it all kind of nets out. Not for 
those 40,000 families. Not for the family that is getting over- 
charged. I mean, you should not undercharge either. You should 
have business practices that take care of that I am not suggesting 
that there is any benefit to undercharging or overcharging. What 
I am suggesting is that if you are overcharged and you find out 
about it, you ought to make them good. And that is what other 
businesses do. I used the example of the checkout counter, but it 
is true in other businesses that you and I deal with every day. 

So my question to you is really simple: Shouldn’t you have, hav- 
ing identified those people, simply provided them — and, still, you 
are not doing it because what you are saying is you are going to 
give them a month credit where it could be years of having equip- 
ment that they were overcharged for? Isn’t that accurate? 

Mr. Keib. It is not accurate to say that they have been over- 
charged for years, and I will just 

Senator Portman. How do you know that? 

Mr. Keib. If I could just take time to explain that in the revenue 
assurance program, we are looking for mismatches of pieces of 
equipment, and what we are trying to figure out is whether the 
service charge on that piece of equipment ties to the actual equip- 
ment. Because of the amount of volume of equipment we are turn- 
ing over right now, whether we are upgrading our modems, up- 
grading our set-top equipment, or actually going all digital and 
have been launching DTAs, there is a lot of transactional volume. 
And what I am told and what I have learned through the revenue 
assurance process is that the mismatch is being driven when a cus- 
tomer is, during this transition window, putting equipment on ac- 
count and taking it off the account and matching that up to the ac- 
tual service charge. 

So what we are doing is proactively every month running a re- 
port to find those discrepancies, and that is why I say based on 
what I have heard from our team is that I would venture to say 
that the majority of those are more recent and within the actual 
30-to 45-day span. 

Senator Portman. OK. A majority are more recent, but you do 
not know that it has not been years. You are now doing this 
monthly analysis, which is a step forward, as I said, and I do think 
this hearing has created some improvements in customer service 
both for you and for Charter, and based on what others have said, 
it sounds like all of you have looked at your processes and come 
up with some new suggestions. So that is positive. 

But, still, you are not providing people the money that they are 
owed even though you know that they deserve a refund. We will 



20 


get back into this with more specificity. I want to move to Ms. 
Mayo with my next round of questions because she is now at Char- 
ter and Charter is going to be responsible going forward for what 
Time Warner’s and Charter’s customer service procedures are. But 
I would hope that even though you have made an announcement 
today you are going to provide customers some relief, that you just 
simply do what you now have the data to be able to do, which is 
to tell the people I represent and people that are represented by 
people on this panel, look, if you get overcharged, you are going to 
get a refund for it, just as you would in other businesses. 

With that, I will turn to my colleague Senator McCaskill and 
then to other colleagues here. Again, I am cutting my time short 
with the hope that we can get eve^body’s questions in. 

Senator McCaskill. He is saying that because he is trying to 
send me a signal that I cannot go over. He knows me really well. 
He know that I am going to get carried away. 

It appears to me from a distance that the business model that 
has grown up in pay-TV is, figure out a way to make the entry 
price as low as possible, figure out how to roll people off that entry 
price as quickly as you can, and then deal with their anger once 
they realize the price has gone up. And, by the way, if they call 
to cancel, make sure you train your customer service people really 
well in how you deal with somebody who is angry, and the angrier 
they get, the more likely they are to get something from you; or de- 
pending on who they get, how skilled the retention agent is in hold- 
ing on to them and handing them goodies, sometimes temporarily, 
to calm them down and hope that you can hold on to them longer. 

Now, there are so many things about this business model that 
are asking for customers to be upset. Do any of you in your adver- 
tisements to try to get customers put the same size pricing on what 
they are going to pay after the promotion as you do for the pro- 
motional price? Do any of you do that? 

[No response.] 

So all of you do the promotional price, and then there is fine 
print. In fact, many of you do not even put what the price is going 
to be after the promotional price, correct? Is that correct? Yes? 
Does anybody disagree with that? 

[No response.] 

So the promotional price and transparency is the beginning of 
the journey that America has with their pay-TV providers. 

Let me ask about HD and other fees. Ms. Schneider, does DISH 
currently charge customers an HD fee? 

Ms. Schneider. So for new customers, we no longer charge HD 
fees. 

Senator McCaskill. So you do not charge HD fees for new cus- 
tomers. What about old customers? 

Ms. Schneider. So we have a small number of customers who, 
when they came into DISH, they had sort of different pricing ar- 
rangements. So for customers today, we include HD fees in the re- 
ceiver fees that they are paying for new Hopper equipment, so it 
is included there. For the subset of customers in earlier days of 
HD, we did not have that fee included in the receiver fees. So they 
are having lower receiver fees and then paying that HD fee as an 
offset. 



21 


Senator McCaskill. OK. So I guess what I am saying is, DISH 
no longer charges new customers HD, but you charge old customers 
HD, correct? 

Ms. Schneider. Well, in essence, we are charging both. They are 
just kind of in different 

Senator McCaskill. But isn’t it true if someone calls in and asks 
to have their HD fee waived, they get it waived? 

Ms. Schneider. If they call in, yes, we will waive it. 

Senator McCaskill. OK. So, once again, hide the ball. So if I am 
smart enough to know to call DISH, if I have an HD fee on my bill, 
if I am smart enough to call and ask for it to come off, you are 
going to take it off, aren’t you? 

Ms. Schneider. Agents will do that for longer-term customers. 
These are long-term customers for us, and so 

Senator McCaskill. So how long do you have to be a customer 
before you have the magic knock to get the fee taken off? 

Ms. Schneider. I do not know that there is a specific time that 
we have there. It is 

Senator McCaskill. See, this is exactly what I am talking about. 
Nobody knows how to get the best price from you guys. Nobody 
knows. There is a secret sauce somewhere, and I think it has to 
do with being really mad, which is really bizarre to me. 

All right. Let us go on to Mr. Patel. You all charge now an ad- 
vanced receiver service fee, right? 

Mr. Patel. That is correct. 

Senator McCaskill. So you took the HD thing off the bill, and 
then you put a brand-new thing on the bill. Now, how many of your 
customers do you think have any idea what the advanced receiver 
service fee is for? 

Mr. Patel. Yes, Senator, our intention was to really simplify the 
sales process, and what we tried to do is simplify the number of 
decisions a customer had to make, and we got it down to three, 
which was you pick your programming package, and the level of 
programming you pick dictates how much you are going to pay for 
the programming package. The second choice is, do you want basic 
services or advanced services? Basic services provide a good HD ex- 
perience but do not include DVR, On Demand, and other things. 

Senator McCaskill. OK. 

Mr. Patel. That is what that advanced service fee is. It provides 
the more advanced services. Then it is $7 per room. 

As a part of the customer experience effort, we found that the 
number of choices customers had to make was extremely complex 
and wanted 

Senator McCaskill. OK, so you wanted to lower the number of 
choices they make, but isn’t it true that not all customers are 
charged the same advanced receiver service (ARS) fee in your com- 
pany? 

Mr. Patel. That is correct. 

Senator McCaskill. And so how do I know whether I get a lower 
ARS fee? Do I have to call and ask you? If I call and ask you, will 
you lower my ARS fee? 

Mr. Patel. No, and it is 

Senator McCaskill. No? 



22 


Mr. Patel. It is kind of an apples-and-oranges comparison, and 
let me explain why. 

Senator McCaskill. Quickly, if you would. 

Mr. Patel. I will. So when the ARS fee was originally intro- 
duced, it was at a slightly higher price, and we have lowered it. 
But 

Senator McCaskill. Did you lower it for everybody? 

Mr. Patel. But the customers who came on board with the high- 
er price received their first room’s equipment for free. There are 
other components of their offer that were different, and so the chal- 
lenge is that it is a very competitive marketplace, and the offers 
from a marketing perspective change very quickly. 

Senator McCaskill. I understand that, believe me, and cus- 
tomers understand that. It is like shifting sand. 

OK. Let me talk about the secret rates offered by retention 
agents. In this investigation, we determined that there are actually 
rates that retention agents are authorized to give their customers 
that are never advertised. Does anybody disagree with that state- 
ment? 

[No response.] 

So that is what is really frustrating. Let me talk specifically 
about Time Warner. To handle customers that want to lower the 
cost of the service. Time Warner provided its agents with a chart 
that showed them how much to lower the price of a package each 
time someone objected. So the people actually had a script. Now, 
if they get mad the first time, you can go down this much. If they 
get mad again, you can go down this much. And then we found out, 
when we interviewed you, that if they asked, they would tell the 
price they just offered was the lowest price available at that time 
even though there was a lower price on the chart that they could 
still offer. And when we asked you about that, you said, “Well, at 
that moment that was the lowest price that agent could offer.” 

That is the kind of stuff that is driving people through the wall. 
Is it fair for customers to not be able to determine when they have 
reached the lowest price? How does a customer know when they 
have gotten the best deal? You can listen to my call. I kept getting 
mad, and I eventually got 120 bucks back, plus I got rid of the 
$7.99. I never would have known to do that if we had not done this 
investigation. 

So will you all make a commitment today to advertise the lowest 
price available? Any of you? 

[No response.] 

Will you publish it on your website, the lowest price available for 
your services? Any of you? 

[No response.] 

I will have more questions the next round. 

Senator Portman. Thank you. Senator McCaskill. Senator Paul. 

OPENING STATEMENT OF SENATOR PAUL 

Senator Paul. One thing that is interesting about pricing is that 
if you go to a car dealer and you say, “What is the lowest price you 
will give me on the car?” nobody in their right mind is going to 
publish that. So the question is: Is there competition or not? It 
looks like there are a lot of choices and you can choose, and they 



23 


have various ways of presenting themselves to try to entice you. 
But that is the marketplace. It is buyer beware, and as long as you 
have choices, if you do not like one of the choices, you do not like 
their service, you simply in America choose another server. 

I think, though, that we need to put this particular problem or 
this particular hearing in sort of a context, the context of what 
kind of problems we have in our country. We have a $19 trillion 
debt. We have an anemic economy that is growing at a point and 
a half Millions of people are not getting jobs because we are not 
growing at a historic rate. 

We have a $7 trillion shortfall in Social Security and a 435 tril- 
lion shortfall in Medicare. But I do not think Congress is having 
hearings on any of these. I propose we ought to have a full perma- 
nent hearing on Social Security that meets all of the time just to 
address Social Security. I have been here 6 years, and there has 
not been one bill to the floor of the Senate to address the entitle- 
ment problem, the looming entitlement problem that we all ac- 
knowledge is there. So I think we do have important problems that 
we do need to face as a country. 

We are asked today to look at the tactics of television providers 
to see if they are unfair, their bills are too complex. We have point- 
ed to low customer satisfaction surveys. Well, one thing is very 
clear, though. Television providers’ customer satisfaction still ex- 
ceeds that of Congress. So I am not sure really if there is enough 
wisdom in Congress that we can impart to people who actually 
have a higher approval rating than we do. 

If we were to examine, though, organizations that fail the trans- 
parency test, we might want to start with government. The Pen- 
tagon has never been audited. It is enormous, it is this behemoth. 
And we have to have defense, but certainly we should audit it. 
They have told us they are too big to be audited, and we just say, 
“Oh, well.” That has been going on for over a decade. 

The Federal Reserve, completely unaudited. We cannot get an 
audit through. We have had very little cooperation in the Senate 
from people saying, “Yes, we need transparency in government. I 
mean, sure, this is an important problem, and it is frustrating. I 
have been there. I have been on the phone with people. In our 
household, we get frustrated calling consumer reps. But at the 
same time, we have big problems as a country. We have to figure 
out what are we going to do with the Fed, the Pentagon, the Con- 
sumer Financial Protection Bureau (CFPB), and really Congress. 
Congress uses bills that are hundreds if not thousands of pages 
long, filled with wonky, technical jargon that is unapproachable to 
the average reader. Congress uses high-pressure situations to get 
people to accept bills they do not like. Few members actually read 
the bills before they agree to them. And, so I think maybe Congress 
might be one of our first items. 

Unfortunately, when you look at your government, you are un- 
happy with your government, you cannot change your legislative 
provider. A lot of people probably would if they could. But when it 
comes to television or cable or satellite, you have a choice. 

The satellite and cable industry in my State has a $4.7 billion 
impact on Kentucky. I think in the midst of unhappiness about 
things not being perfect — and nothing is ever perfect. We realize 



24 


you have a choice, but we should not lose sight of the fact of what 
the television industry does for our States as far as jobs and occu- 
pations and money for each of our States. 

Maybe we should be asking, How can we help them grow their 
business? The only way they grow their business is by having bet- 
ter consumer service, but maybe there are obstacles such as taxes 
or regulations that add costs to your bill, too. 

I know that when I look at my phone bill, I see a lot of govern- 
ment stuff on there, and so maybe there are ways that we could 
make the bills less by actually removing government obstacles. 

The fact is that the market for television content has evolved 
quite rapidly through its own technological advancement and ex- 
panding consumer choices. Milton Friedman once argued that the 
essence of an effective television industry, an effective telephone in- 
dustry, an effective computer industry, or an effective mail delivery 
industry, you name it, is competition. If there is an argument that 
there is not competition, then these can be really serious problems. 
As long as there is competition — and there appears to be vibrant 
competition — you have a choice. 

I have a choice in Bowling Green of two cable companies. I have 
two satellite companies. I can stream things. I have to have my son 
help me with that, but I can stream things as well. There is com- 
petition. There are now more subscriptions that you can get with- 
out a contract because it is becoming very competitive. We have 
one big cable company that was bankrupt. Apparently, there is not 
a huge amount, they are struggling to make enough profit. 

But, anyway, I think it has even come to the point now that we 
have simpler billing as a marketing tool. Some of the different com- 
panies here are actually marketing that they have simpler bills to 
try to get business away from their competitors who may not be 
doing as good a job. 

So, I do not know, I just think we need to put this hearing in 
perspective and not get too carried away. I have the same frustra- 
tions — I mean, everybody does in the modern world — of trying to 
call and get through to these companies. But we have to realize, 
first, do no harm. l3o we want to get involved with an industry and 
do it to such an extent that ultimately we screw up something that 
is actually working very well in many instances and acknowledge 
that, look, we have hundreds and hundreds of choices of channels, 
maybe the house is not on fire. Maybe things can get better and 
will get better through competition. But I for one want to make 
sure we do not go too far in one direction. 

Thank you. 

Senator Portman. Thank you, Mr. Paul. And as I said at the 
outset, competition is something we are looking into because at 
least in my home State of Ohio, we do not have the kind of com- 
petition I would like to see. I have some numbers here indicating 
how there is a lack of competition now. 

But, on the other hand, we heard from some of you about how 
competitive forces have been helpful, and some of you have even 
raised some things that could be done in terms of providing a more 
level playing field so there is more real competition. And I agree 
with you. That is how you ultimately get better service. Senator 
Lankford. 



25 


OPENING STATEMENT OF SENATOR LANKFORD 

Senator Lankford. Thank you, Mr. Chairman. Thanks for 
hosting this hearing and the conversation that is here, but as Sen- 
ator Paul has mentioned as well, there is a context of this. As I 
read through the notes and as we received this early this morning 
and late last night, one of my first thoughts on the section on not 
getting an answer the first time that you make a call in customer 
service, I wondered how many times that our constituent service 
folks on our staff have tried to call the U.S. Department of Vet- 
erans Affairs (VA) or Social Security or multiple other agencies and 
we will work for months to get an answer to a question that should 
be a straightforward issue. So there is a great deal within govern- 
ment right now that lacks in customer service as well, and I think 
that deserves a very public acknowledgment that all of us have a 
very long way to go, and dealing with cable customer service is the 
pot calling the kettle black as we work through this process. 

Saying all that, I have also had people call my office that have 
been incredibly frustrated by not getting attention with their cable 
provider, and they reached a point where they called their cable 
provider so many times and got non-answers that they eventually 
called their Senator, who we called someone that we knew, and 
they eventually got attention. And it was the oddest thing for me 
to think. Why does it take literally an act of someone in Congress 
to try to get attention on someone who has a billing problem, espe- 
cially for senior adults that call our office? 

Now, in the training — and one of the issues that I have is in the 
training, and I understand there is a lot of selling and there is a 
lot of work toward profit. Saying that the people that are on the 
phone want to actually sell you a program is not shocking to me. 
It is much akin to saying I am shocked there is gambling in Casa- 
blanca, that there are people that are in a for-profit business are 
trying to actually stay in business and sell a product. 

I do have a concern often when we deal with people that are sen- 
ior adults that do not understand the billing. So the request that 
I would have is whatever customer service upgrades that you have 
made — and all of you have made comments about increased train- 
ing and capabilities — would you please make sure that you are pay- 
ing attention to the fact that there are senior adults that are call- 
ing that have no idea about this billing practice and have no idea 
of all these packages, and they are being taken advantage of? And 
that is something intolerable in this process. 

Let me ask a couple of things, though. In the billing as it comes 
out itself, somebody give me a guess. In the typical customer pay- 
ing for cable services, what percentage of that is State, local, and 
Federal taxes that they are also paying when they pay that month- 
ly bill? Can somebody give me a guess? 

I see lots of thinking. Pen and paper is coming out. 

Mr. Keib. I could say that at a minimum we charge what is 
called a franchise fee, which is around 5 percent, at a minimum. 
And then there are other taxes and fees on top of that. The reason 
why it might be a little bit difficult to give you those exact num- 
bers, it varies by State sometimes. 

Senator Lankford. Sure it does. Right. 



26 


Mr. Keib. So on an average $100 bill, I think 5 percent is a min- 
imum number. And then I think you could work off of that number, 
depending on the market for fees and passthrough fees and things 
like that. 

Senator Lankford. Does anybody have a different number be- 
sides 5 percent there? 

Ms. Mayo. I would guess at least 10 percent. 

Senator Lankford. OK, at least 10 percent being State, local, 
and Federal taxes, some sort of fee that is attached to it. 

I want to talk about an ongoing challenge that we have with 
packaging, and then I also want to get to streaming, and so we are 
going to have a conversation coming about some of the streaming 
services that I know you all are also experimenting with a great 
deal right now. 

The cost of the actual content that is coming to you, there is an 
ongoing conversation about that as well, because as everyone com- 
plains about their cable bill, what I hear back typically from cable 
providers is, “Do you have any idea how much it costs for XYZ con- 
tent coming in?” Where does that fit into the typical billing prac- 
tice? And as you all are actually trying to forecast, let us say, 5 
years from now when you talk about hardware, when you talk 
about fiber being put in the ground, and you talk about content, 
where does that rank? When you do your own strengths, weak- 
nesses, opportunities, and threat (SWOT) analysis and you are 
looking at the threats, where does content fit into that? 

Mr. Patel. I will take that. Senator. 

Senator Lankford. Yes, sir. 

Mr. Patel. Content costs rising is a really significant issue, and 
I do not think consumers truly understand the dynamic that is in 
place. We talked a lot about pricing, billing, and fees. But, for us, 
for 8 out of the last 11 years, the cost of the content has actually 
exceeded the pricing that we have passed on to the consumer. And 
so we are in a difficult position. It is a very challenging thing to 
do to pass on pricing to a consumer. No matter how you notify it, 
it is going to be something that causes a negative reaction from 
customers. 

From 2005 to 2015, content costs grew 95 percent, and to put 
that into perspective, it is growing at three times the rate of any 
other goods or services. And so I think it is an issue. I think it is 
exacerbated by the fact that the agreements require you to carry 
a lot of channels that consumers do not have demand for. And both 
of those things I think create pressure and create sort of a struc- 
ture that is not in the best interest of the consumer. 

Senator Lankford. So going back to Senator Paul’s conversa- 
tion — and Senator Portman and Senator McCaskill have all raised 
this issue about competition — the ongoing conversation in the coun- 
try right now is about just streaming content rather than actually 
buying from cable or buying from other satellite providers. You all 
are doing both, where you are actually streaming content as a sep- 
arate service with Sling — is that correct? — and then also through 
satellite. So tell me about modeling for that and trying to work 
through providing competition in that area for another completely 
different delivery device, because the key thing for me is can people 
get content that they choose to get in the medium that they choose 



27 


to get it in, so if they are ticked off about the latest $3 to $6 fee 
per room that they have to pay for, they have some other option 
to be able to go to. 

Ms. Schneider. Yes, so Sling is our over-the-top product that we 
have for streaming. Sling is a bit more modular in terms of what 
we can do to provide content. So where we have a bit more bun- 
dling with our traditional product. Sling is a bit more modular in 
that customers have more choice in terms of having a basic pack- 
age that is really affordable and then adding, slimmer packages to 
it so it gives them more choice along those lines. Does that answer 
your question? 

Senator Lankford. It starts that. This is a longer conversation 
that we can have that we do not have time for right now. I do have 
to tell you I, along with every other American, get incredibly frus- 
trated. Senator McCaskill did a great job of outlining a basic call 
on customer care. All of us get ticked off at that, not only the 
length of time but the frustration with it. But I am especially con- 
cerned about senior adults in my State and the potential for them 
to be taken advantage of in this process based on the complication 
but also the difficulty they have had, even seniors that have called 
me saying, “I cannot even disconnect my service or get an answer,” 
and they just want to say no, but they are so incredibly kind and 
nice, they cannot seem to turn things off. And so that has to be ad- 
dressed in the days ahead and should be addressed in a way that 
actually honors the people that have been a part of that service 
and paying customers all along. So thank you. 

Senator Portman. Senator Baldwin. 

Senator Baldwin. Thank you. 

I wanted to start based on Senator Lankford’s last comment. We 
certainly hear from our constituents with enormous frustrations, 
but almost all of us, I assume, have had our own frustrating expe- 
rience. We are not strangers to this. 

I am actually curious about your own experiences with your own 
companies, and I wonder if you get pay-TV from the company that 
you are with now or formerly were with. Why don’t you go across 
and let me know? 

Mr. Karinshak. Yes, Senator, I do. 

Senator Baldwin. John. 

Mr. Keib. Yes. 

Senator Baldwin. Sorry. That was way too informal. Mr. Keib. 
Ms. Mayo. 

Ms. Mayo. Senator, I subscribe to Comcast service. 

Senator Baldwin. OK. 

Mr. Patel. Yes, I do. 

Ms. Schneider. I am a DISH customer. 

Senator Baldwin. OK. Do you call the same service number that 
any of us or our constituents would if there is, to initiate the serv- 
ice or to deal with problems? Or as current or former team mem- 
bers, do you have an inside number, a colleague or somebody who 
takes care of that for you? Why don’t you go ahead, Mr. Karinshak? 

Mr. Karinshak. Yes, Senator, I have it as a normal paying cus- 
tomer, and myself and my team will also do calls into our system 
as well as normal customers. 



28 


Senator Baldwin. Yes, I was impressed in your testimony that 
you talk about you are sort of engaging in the different aspects of 
the business and sort of trying to figure out what the customer ex- 
perience is. If you had an outage, you would just go through the 
800 number, or would you have, an inside way of fixing it? 

Mr. Karinshak. So I could go through the 800 number. I also use 
my account app, so I do some things online as well to be able to 
see the outage, when it would be cleared, but would experience it 
calling in as a customer. 

Senator Baldwin. OK. 

Mr. Karinshak. And I take calls from customers directly, too. 

Senator Baldwin. OK. What about you, Mr. Keib? 

Mr. Keib. All of our employees within Time Warner Cable, if 
they are in our footprint, have Time Warner or used to have Time 
Warner. And in terms of service, at the individual account level, ei- 
ther mine or my family or any relative that asks for help, I would 
go through the normal channels. If there is an outage that is, state- 
wide or something that happens on a large scale and it impacts me, 
I would make sure that we are on top of it but not really out of 
a self-serving, purpose. 

Senator Baldwin. How about you, Ms. Mayo? 

Ms. Mayo. I am sorry. Senator. I am a little bit abnormal. I do 
not live on footprint for Charter service, so I actually subscribe to 
two different cable operators. One is Comcast and the other one is 
Cablevision. 

Senator Baldwin. OK. 

Ms. Mayo. So I use their services. I call their lines. I get support 
just like any other customer. 

Senator Baldwin. OK. Mr. Patel? 

Mr. Patel. I have DirecTV service and generally will use the 800 
number, the same 800 number our customers use, or our online 
tools. Like Tom, we also have access to being able to listen to calls, 
and so we will do that quite frequently to get a pulse of how the 
customer is being serviced. 

Ms. Schneider. So the same. If I have an issue, I would call in 
to our service as well. And I think a lot of us probably have the 
advantage of knowing — if we have technical issues, we know how 
to trouble-shoot those things ourselves. So there is probably a lot 
more self-service with the folks up on the panel than other cus- 
tomers. 

Senator Baldwin. Well, back to the original point. I hear con- 
tinuously from Wisconsin residents sharing their frustration with 
pay-TV, satellite and cable. One consistent complaint that I have 
heard over the years is that TV providers will not let customers 
purchase their converter box, and instead customers are forced to 
rent it, which costs them much more money over time. 

I also want to share a story from one constituent which has al- 
ready been — the issue has already been referenced in our hearing 
thus far, but the constituent explained that he was given a 2-year 
monthly rate for TV and phone by AT&T, but after a year his bill 
increased by more than $80 without his consent. This additional 
$80 gave him no added service, and, in fact, at that point three 
channels and music stations were removed. He said that AT&T 
told him that he would have to pay for computer service in order 



29 


to get his channels back and ultimately hung up on him. My con- 
stituent also explained similar billing issues with both Time War- 
ner and DISH. 

He ended his letter with this plea, and I quote: “Senator Bald- 
win, I hear these complaints from everyone. What can you and the 
Senate do to make all providers sign a contract so that they can 
be held to their words and finally remove all their false mar- 
keting?” 

Now, this is just a sample of what I hear regularly, but in light 
of Senator McCaskill’s earlier question about, how big is the price 
for the promotion versus how are you adequately explaining or are 
you adequately explaining to the customer what is going to happen 
in this 2-year promotion where the price goes up after the first 
year, in light of these concerns that we hear over and over again, 
I would like to hear from the entire panel what more are you doing 
to ensure that your companies are not promoting misleading pric- 
ing information? And what are you doing to grapple with these per- 
vasive billing issues? Why don’t we go across the panel once again? 

Mr. Karinshak. Senator, it is very important to make sure the 
customers understand exactly what they are getting. We do offer 
a wide array of products and a wide array of pricing, and so we 
have done some additional things from a disclosure perspective to 
help with that. 

First, whether you order our service online or with one of our 
employees, they are required to go through a full summary at the 
end of that interaction detailing all of your monthly recurring and 
nonrecurring charges. We also follow that up with an email that 
we send to the customer at their preferred email address detailing 
exactly the order and what is next as well, for example, things like 
the technician coming to their house. 

We also partner with a company called SundaySky to deliver a 
video that is a personalized tutorial for any changes they make to 
their package or for a new customer. And we also back it up with 
our 30-day money-back guarantee as well. 

Senator Baldwin. Thank you. 

Mr. Keib. Yes, I will try not to be redundant with anything that 
Tom mentioned, but what I would say is I think the most impor- 
tant thing is what the customer actually sees on the bill and mak- 
ing sure that what we are charging for is clear. And I would say 
one of the more recent things we did was try to show the pro- 
motional discount in relation to the full rate. So, for example, if the 
full rate was, say, $129, there would be a minus sign listing clearly 
what the actual discount amount was, let us say it was $40 or $20, 
and then it comes to a summary price of what that actual bill is 
so that that customer in any given month would be notified that 
there is actually a higher rate there and that this is a promotion 
of X dollars. And then when we come up on that window at that 
time, be it 12 months or whatever the expiration of that window 
is for that core service, they would see that actual discount go 
away. Or if it was a 2-year roll, as someone alluded to earlier, they 
would see it get reduced. 

Senator Baldwin. Ms. Mayo. 

Ms. Mayo. That is a good point, and that was part of changes 
that Charter made recently in an effort to be more transparent 



30 


about billing to show the full charge and then the discount that the 
customer is getting. So I agree with John, also with Tom. If you 
are dealing with a customer service rep on the phone, a sales rep, 
and you place your order, the sales rep will recap exactly what you 
should expect on your bill for and exactly any charges that you 
would see on your bill the first time. We also send an email to the 
customer confirming the bill. We are working on improving that 
with more information, but we have the core infrastructure set up. 

If you go into a Charter store, you obviously get confirmation of 
what your order is. If you have a direct conservation with a sales 
rep, you are getting confirmation of what your order is. But on our 
website, you will get an email, and with that, too, we are improving 
the content associated with the confirmation that comes from the 
website. 

Senator Baldwin. Mr. Patel. 

Mr. Patel. We try to disclose the terms at multiple touch points 
on the initial sales call, we have implemented a tool that essen- 
tially tells the customer and the agent what the required call com- 
ponents are relative to what the customer ordered. What we found 
is historically all the generic terms were disclosed and the cus- 
tomers were kind of losing attention. And so communicating the 
fewer things that were more relevant to the customer was impor- 
tant. 

No. 2, we record all of our sales calls in our direct sales call cen- 
ters. And so if a customer ever says, “I was told something else,” 
we make it a point to be able to pull that record and hold agents 
accountable. Agents are essentially given two opportunities to not 
make a mistake when it comes to the terms and agreements with 
the offer. If they do that twice, the consequence is they would lose 
their job. And so we try to hold the agents accountable. We have 
disclosures online, including a place where we spell out over the 
course of 2 years how your prices change. We send an email con- 
firmation. We have a written customer agreement. 

And then the last thing, and I think probably the most promi- 
nent, is on the bill. We made changes so that from the initial bill 
you know exactly what the full price of the product is, what the 
discount amount is, and we even show you that you are in Month 
1 of 12 of that discount. And it changes every month, providing a 
constant awareness for consumers that I have 2 more months left 
for this discount. When the bill does, in fact, change, we spell it out 
for customers on the front page. 

And so, we have tried to do as much as we can to disclose this 
to customers and to also drive accountability and controls in the or- 
ganization if and when mistakes are made. 

Ms. Schneider. So I think DISH might be a little bit different 
in that we have an option for a 2-year price lock, so customers have 
a 2-year commitment to us, and we can align pricing and do a price 
lock for them during the entire term of their contract with us, ini- 
tial contract. But in addition to that, if they stay with us beyond 
that 2-year price lock, they will likely experience some price 
changes, so whatever the then-current pricing is. And so we follow 
form, kind of similar to what other panelists talked about with re- 
spect to during the sales call, we do all of the disclosures, cus- 
tomers get an email that outlines all of the things that they need 



31 


to understand, including pricing terms with their new service. We 
do something with our new customers where we do — either if they 
call in before 10 days or they — either they contact us within 10 
days, or if they do not, we will outbound them and walk them 
through all of the things that they need to know as a new customer 
with DISH, including anything with pricing, installation, other 
things. We never want anybody to be surprised by anything that 
happens on their bill, and we also do the bill statement messages 
and things along those lines that other panelists talked about. 

So we really do try to make an effort to make sure people under- 
stand the terms of their new agreement with us and that they do 
not have any surprises. 

Senator Baldwin. Thank you. 

Senator Portman. OK. I would like to get back to some of the 
questions that we were talking about earlier that have to do with 
people getting overcharged and then companies knowing that they 
are being overcharged and not getting the refunds. 

First of all, with regard to the bills, I have a copy of a bill here. 
It happens to be from Ohio. It happens to be a bill that has over 
a dozen line items in it. One of the responses that we have gotten 
from companies is that people ought to look at their bills, so if you 
are being overcharged, you ought to be able to find that. 

First of all, I think it is very difficult to discover that you are 
being overcharged if you do not know what the equipment is, you 
do not know what the correlation is between the charge and the 
equipment. But, second, look at one of these bills. It is pretty darn 
complicated. And part of what I guess I would ask you, Mr. 
Keib — and I appreciated your answer earlier that you thought that. 
Time Warner could have done better in terms of allowing, say, 
these 40,000 Ohioans who in 2015 were overcharged, could have 
done a better job at dealing with that. You have come up today, 
as I understand, with a new policy proposal that Charter, being the 
new company, is, I guess, going to implement that there be a 1- 
month credit regardless of how far back it goes. We talked earlier 
about whether you would know how far back it went. 

I guess one question I would have for you, and to Ms. Mayo as 
well, is: Why not at least notify the customer, say, “Hey, look, we 
have overbilled you, we have overcharged you. Look at your bill. 
Tell us how long that has been” — if you cannot find out for them, 
at least give them the information, the notification to be able to 
find it themselves. Have you thought about that, implementing 
that kind of a notice procedure? 

Mr. Keib. Yes, and as I mentioned earlier, I think that we 
do — as I said, when we define the number of customers impacted — 
and it is not a dynamic number or constantly changing, like the 
equipment example we discussed earlier. We do provide notice that 
we overcharged and for how much. 

The example relating to equipment, because of the transactional 
nature and the volume of equipment that is moving in or out, it 
is a little bit harder to determine in our billing system and the way 
we run it to figure out the exact origin date of when those cus- 
tomers were impacted. 

But to your core question, as to should we notify or not, I think 
that is a natural progression of any revenue assurance program. 



32 


and I think that in hindsight we should notify customers if they 
were being overcharged. And as for what we do going forward, I 
would kick that to Kip because ultimately I think it falls in her de- 
cisionmaking. 

Senator Portman. Yes, well, I think what you just said is signifi- 
cant. You think that customers should be notified, and with regard 
to the equipment particularly, which you say is more complicated. 
And I know you are no longer in a position to implement that, but, 
Ms. Mayo, you are. So we have kicked it to you. Maybe two ques- 
tions for you. One is do you agree with Mr. Keib that one of the 
things you ought to be doing now is at least notifying these cus- 
tomers so that they know they have been overcharged? Again, 
40,000 customers last year, over 11,000 customer, just in Ohio, and 
this is an issue that I know you are attempting to address today 
with your own proposal. Yours today, as I understand it, is that 
you will give a 1-year credit to customers who have been over- 
charged. For Time Warner legacy customers, I understand it is 1 
month. 

And so my second question to you is: Now that you are in charge 
of both, the Time Warner legacy customers as well as your tradi- 
tional Charter customers, why wouldn’t you have the same policy? 
Why would it be a month for one and a year for the other? Of 
course, the policy I would like to see is going back and giving them 
their full refund, which, again, is what other companies have man- 
aged to do. You now have this ability, as I understand it, through 
your new audit program to be able to understand what happened. 
But if you could talk about that discrepancy and talk about what 
the possibility would be of actually providing a real refund to make 
everybody whole, and then also talk about, if you could, this notion 
of notification? 

Ms. Mayo. Sure. So I want to be very clear that producing an 
accurate bill is our responsibility. It is not the customer’s responsi- 
bility to find a mistake. It is our responsibility to produce an accu- 
rate bill. And at Charter, as I said in my opening statement, even 
though we had a 99.4 percent accuracy rate, which seems high, it 
is not high enough. And we do believe that 100 percent accuracy 
is the only acceptable solution. 

So after this was discovered, we were able to put in place a daily 
reconciliation process that we are running every single day and 
looking at every single customer’s account and looking at the box 
charges on the account and the number of boxes. And on any given 
day if the box charges exceed the boxes, we will remove the excess 
box charge. This will assure 100 percent accuracy in charging set- 
top boxes. We are going to implement the exact same thing at Time 
Warner Cable. 

Now, as you know, we closed on Time Warner Cable just about 
5 weeks ago, so I am still getting my arms around it. I am still try- 
ing to understand the billing systems and how they work, because 
we all operate our billing systems differently. But the programmers 
are already working on the design of that reporting. It is a little 
bit more complicated for Time Warner Cable because of the way 
they package their services. Some of their packages include a free 
set-top box, and so, in some instances it is not a billing error that 
there is no charge there because it is embedded in the service price. 



33 


So we have already identified 11 exceptions that have to he con- 
figured into this reporting. I am probably going to need about 60 
days to get it in motion. But we will do that, and then we will have 
100 percent accuracy not just with Charter and Time Warner Cable 
but Bright House as well. 

Relative to notification of customers, I agree with you, I think we 
should notify customers. There is no question about that. And as 
you had mentioned. Senator, we will be notifying our customers 
and giving them a i2-month credit for any overcharges discovered 
through our reconciliation. 

Senator Portman. You talked about 100 percent accuracy. Just 
quickly, with regard to, again, your legacy customers coming in, my 
understanding is Time Warner, with regard to its correction of bill- 
ing errors, aims for 80 percent, has in the past, understanding they 
are now part of your organization. Is that accurate? 

Mr. Keib. I would like to address that. I do not think the aim 
is 80 percent. I think that the aim is to try to get to 100 percent. 
In the billing system that we have or we use in Ohio, the fix that 
we put on that account does not necessarily correctly impact cus- 
tomers that are in pending status. And what that would mean is 
that they have ordered service, but they have not been installed 
yet. So one of the reasons we have that breakage is that when we 
apply that fix, it is not sticking on customers who have yet to be 
formally installed. 

So, again, in terms of process improvement, there is an oppor- 
tunity to do that, but I do not think it is that we are aiming for 
80. I think that is what we are getting based on the way our sys- 
tem is set up in the last several months. 

Senator Portman. So you are only able to correct 80 percent 
based on your system. We have also learned that Time Warner 
Cable uses computer software that is known as Macro that rou- 
tinely has failed. Is it true that in some months it has been so dif- 
ficult to fix the error that Time Warner Cable simply does not cor- 
rect any bills for that month? 

Mr. Keib. If we are talking about the equipment charge, what I 
can say based on my familiarity with this is that if there was a 
20-percent breakage that you referenced earlier that did not — 
where the, quote-unquote. Macro did not take effect, that the next 
time we run that report again, it would indeed capture that break- 
age and try to fix it. That fix would happen the next month. 

Senator Portman. OK. From our investigation, we learned that 
in May of this year, 2016, you did not make corrections for that 
month because of the computer software issues. And you are saying 
you will go back and later fix that in this month and succeeding 
months? 

Mr. Keib. I want to be very clear that I am talking about the 
process, and the following month, if it did not fix that, we will 
rerun the same fix. And I would have to verify for you that the 
very specific customers that you are referring to fall into that buck- 
et to make sure I am being accurate. 

Senator Portman. OK. Again, my concern is what Charter is 
going to do going forward and making sure these customers are 
both notified and made whole. And I appreciate again that we have 
made improvements, and based on today’s announcements that you 



34 


have made in the context of this investigation, that you are going 
to provide some credits. But I hope going forward that you will also 
provide that information so the customers can understand what the 
issue is and make them whole. Senator McCaskill. 

Senator McCaskill. Thank you, Mr. Chairman. I am dis- 
appointed that Senator Paul left because I want to welcome him to 
oversight. I have spent hundreds of hours in this Committee room 
doing oversight of government, of every part of government. I wel- 
come him to the oversight of our military contracting acquisition 
process. I have spent hours and hours and hours in many hearings, 
not only on acquisition there and oversight there, but policy and 
procedures throughout our government. So I am an oversight kid, 
and I think if we are going to stop doing oversight because we are 
unpopular, we might as well put a sign on the door that says, 
“Gone Fishing,” because I cannot think of anything we would be 
doing oversight on that is, not more popular than us. I mean, we 
are the least popular right now. But that does not change our obli- 
gation to address things our constituents care about. And I think 
you guys know constituents really care about their TV, and they 
care about how they are treated. 

And so I am not about to apologize for caring about oversight in 
this area because it is what I have heard from the people I rep- 
resent. And I am all in on oversight of government, and believe me, 
when somebody calls with a VA complaint or somebody calls with 
a Social Security complaint or somebody calls with a cable TV com- 
plaint, I am on it. And I am not going to apologize for it, and I hope 
to see more of Senator Paul here. Frankly, at most of these hear- 
ings, we do not have very many people sitting out there. It is pretty 
dry stuff. It is in the weeds. And I welcome his attendance at many 
of those hearings in the future. 

I want to talk a little bit about the fees and taxes. I have a cou- 
ple of Charter bills in front of me, one more recent than the other, 
and I just want to make sure I put this in the record,^ Ms. Mayo, 
because one bill, the total for TV services, for Charter cable serv- 
ices, is $158.98. And there is a sales tax of $1.25, and there is a 
franchise fee of $8.69. And then there is an FCC administration fee 
of 9 cents. So I have added those up, and that is $10.03 on a bill 
of $158.98. 

On another bill I am looking at, the bill was $54.99 for TV, 
$39.98 for Internet, and the taxes, fees, and charges were $2.28. 

But there is one item under taxes, fees, and charges that I want 
to spend some time on now, and that is, the broadcast TV sur- 
charge of $5. That is the biggest item under taxes, fees, and 
charges. 

Now, if I get this bill and I am somebody who is not really edu- 
cated, I am going, “I cannot believe the government is charging me 
$5 extra for broadcast TV surcharge, because it is right there with 
taxes.” 

And then fast forward, and just a few years ago, what was intro- 
duced is now not only are we getting broadcast TV charges, but 
now we are getting Regional Sport Network (RSN) charges. 


^The bill referenced by Senator McCaskill appears in the Appendix on page 48. 



35 


Now, what I want to make sure I understand here is that this 
has heen a decision, I believe by all of you — raise your hand if you 
did not — that you would take — OK, DISH did not. You did not put 
any RSN or broadcast surcharge fees in. OK. So DISH decided not 
to do this, but the rest of you decided that you were going to take 
something that was in the basic programming fee for buying your 
service, and you were going to put it in another place on the bill 
and call it something else. 

I would ask you, can you tell me why all of you decided — isn’t 
it true that all of these were previously in your video charges? Mr. 
Karinshak. 

Mr. Karinshak. Yes, Senator. 

Senator McCaskill. And Mr. Keib. 

Mr. Keib. Yes. 

Senator McCaskill. And Ms. Mayo. 

Ms. Mayo. Yes. 

Senator McCaskill. And Mr. Patel. 

Mr. Patel. Yes. 

Senator McCaskill. So all of these were in your video charges. 
And then I believe — I do not know, was it 2 years ago — you just 
decided, “We will put those down there with the taxes and the sur- 
charges.” And some of them started out for Regional Sports Net- 
works, $1.39 a month, and now they are up to as high as $5 or $6 
a month. 

Did you inform your customers that you were taking something 
out of what they were normally paying for in their video package 
and giving it a special line item? And can somebody give me a good 
excuse as to why that happened? And what is going to keep that 
from being the future billing model? 

Mr. Patel. Yes, Senator, I would like to explain our decision 
process. We are a nationally priced product, and so because we 
have a national service, broadcast channels are available nation- 
ally, and we include those in our package. 

Regional pricing, regional sports, however, vary significantly 
market to market. Essentially what has been happening is, in the 
particular market, a content company may decide to buy the con- 
tent rights for a sporting team. And I will use L.A. and the Dodgers 
as an example, and they will pay an outrageous amount for those 
rights, create a new channel, and effectively try to force-carry that 
channel in a market. 

And so for us, the choice on Regional Sports resulted from being 
in a market like New York where you have lots of teams and con- 
sumers in New York get access to all of those regional channels, 
versus in a market like St. Louis where the costs are one-third to 
one-fourth of what the New York costs are. What we did not want 
to do was to essentially pass on all of the costs to all consumers. 
To us, carving out RSNs was a way to essentially put the costs 
where the content was available and where the customers were 
benefiting. And as we did that, in a third of the country, we do not 
charge RSNs because the rates for RSNs have not — these deals 
have not been struck — and they have not escalated. So that is in- 
cluded in our base packaging. But in markets where rates are four 
times what they were a few years ago and there are significant 



36 


charges, we did not want to levy those on customers who do not 
henefit from the programming. 

To put the fee in context, in all of our markets, the RSN fee is 
less than 50 percent of our underlying cost for RSN in that market. 
And so that was our decision process because we are nationally 
priced product. We did not do that for broadcast fees because 
broadcast channels are available nationally. 

Senator McCaskill. Don’t they belong up above, though? Don’t 
they belong with your part of the bill? Aren’t they, in fact, pro- 
gramming costs? They are not taxes. They are not something that 
you — I mean, this is something that is part — I mean, why are they 
being put in this category to give the consumer the impression that 
this is something the government is doing to them? 

Mr. Patel. Yes, I think in our bill it was in other charges, but 
that is a fair observation, and maybe that is something we will go 
back 

Senator McCaskill. Why did the rest of you put this down with 
taxes as opposed to putting it up with your programming costs? 

Ms. Mayo. Senator, we did put the broadcast surcharge in the 
charges and fees section. We do not charge an RSN at Charter. 
And we did that not to try to make it look like it was a govern- 
ment-issued fee or charge, but it is nondiscretionary. If we put it 
in the video section, the concern was the customer would then be 
calling and saying, “I do not want that. I would rather not have 
that.” 

Senator McCaskill. Well, HBO is in that section, and they do 
not have to have that. 

Ms. Mayo. No, they could remove the HBO product but not the 
broadcast basic product. 

Senator McCaskill. Then maybe you should create a whole cat- 
egory, nondiscretionary extra programming, and maybe then people 
would begin getting angry about the amount of money that is being 
thrown around in sports right now that is causing these prices to 
go so high, which is the subject of hopefully another look at what 
you all are going through in terms of shifting sands in terms of 
your programming costs. I get that is another component of this. 

What about for Comcast? Why does that fee go down in a section 
that makes customers think it is a tax? 

Mr. Karinshak. Senator, we agree with you around the impor- 
tance of the disclosure. We did notice our customers, and we do not 
include it in the area with taxes or any government-mandated fees 
or surcharges. 

Senator McCaskill. That is terrific. I will just have one other 
question, and then I have a bunch for the record. 

I know that you all in the past, Mr. Karinshak, have reviewed 
complaint data to determine the percentage of customers who stat- 
ed that a Comcast representative quoted them the wrong price. In 
some cases this was as high as 30 percent for certain complaint 
types. Did you take on an analysis to determine whether the cus- 
tomer was right in connection with that? 

Mr. Karinshak. Senator, we do look at our complaints data, and 
we still have the opportunity to improve our disclosures for some 
of the things I had referenced before around implementing the 
order summary at the end of every point-of-sale interaction, for 



37 


being able to go through and send the email, as well as on the 
video bill, and reinforcing the 30-day money-back guarantee. That 
was one input that we looked at in ultimately making those 
changes. 

Senator McCaskill. No one has had a chance to address this. 
Does anybody want to address, before I close — and I will have a 
bunch of questions for the record. 

Does anybody want to address the practice of charging someone 
to remove an optional product from your bill? Mr. Patel. 

Mr. Patel. I can answer that. 

Senator McCaskill. That would be a good one for you to take. 

Mr. Patel. We do not charge for removal of any services other 
than warranty service, and the reason that that is in place is es- 
sentially to prevent gaming. A lot of times when a consumer re- 
quires free services or a free upgrade, which is a part of our protec- 
tion plan program, they can get an equipment upgrade every 2 
years. What we were trying to prevent is a consumer getting that 
benefit and then the very next month removing the service. And so 
that is the only service through which — 

Senator McCaskill. And that was a problem? Somebody would 
get an equipment upgrade and then the next month quit? 

Mr. Patel. Yes, you know, so one of the — I mean 

Senator McCaskill. That makes no sense. 

Mr. Patel. Well, no. What we 

Senator McCaskill. Why would you go through the trouble of 
dealing with you guys to get an equipment upgrade, get somebody 
out there to change your box or whatever, and then quit the next 
month. That is not logical. 

Mr. Patel. No. The point is the equipment upgrades. As you 
transition from standard service to HD or now HD to ultra-HD, 
customers normally would have to pay for that equipment upgrade. 
And one of the benefits of the protection plan is that in up to four 
rooms within your home you are able to get that equipment up- 
grade free every 2 years. The thing that we were trying to solve 
is the very one that you mentioned, which is, before, if an existing 
customer wanted to upgrade, they had to call their provider, hag- 
gle, maybe threaten to leave, and maybe then they would get that 
upgrade as a complimentary service. So we made this a part of our 
protection plan program where every 2 years you can refresh your 
experience in up to four rooms 

Senator McCaskill. I am just telling you, I 

Mr. Patel. And, you know, it just 

Senator McCaskill. I am not aware of that, and you are one of 
my providers, and I have never heard that I get free upgrades 
every 2 years. And I did not get any of that information when I 
tried to change that. So I think there is a disconnect between what 
you believe is going on in the field and what is actually going on 
in the field. 

Anybody else want to give me a reason why you charge someone 
to quit paying you something? 

Ms. Mayo. Senator, if I can, we do not charge any kind of 
change-of-service fee for upgrades or downgrades at Charter. And 
we do not charge any kind of early termination fee. So we know 
that we have to win our customers’ business every single day be- 



38 


cause they could walk out the door any day. Those are fees that 
we are not enamored with and we do not use. 

Senator McCaskill. Anybody else want to talk about — I think 
DISH charges to get rid of the protection also. You guys charge. 

Ms. Schneider. It is true. We have a $3 removal fee, and it is 
a very similar situation to the one that Rasesh just described 
where if the customer — so what we normally charge somebody for 
a truck roll is $95. If a customer is on the protection plan, they pay 
a greatly reduced rate for that. So they will pay $10. The protection 
plan is unique for us because you can add it the day that you need 
it, right? So if you call us and you have an issue and you require 
a truck roll, you can add the protection plan. It is $8. And what 
we ask folks to do is keep it for 6 months. 

Senator McCaskill. I see. That makes sense. I just wanted to 
say for the record that your regulatory — your RSN fees are put in 
other charges and credits, which include other charges like regu- 
latory recovery fees. So I am not sure it is really clear that that 
is something you guys are charging for that. 

“Inside the Box,” I recommend it. It is on the website, 
McCaskilI.Senate.gov. I recommend the Subcommittee joint report 
to anybody who buys pay-TV. You will learn a lot. And I want to 
thank all of you for cooperating in the investigation. I really want 
to thank the Chairman for his patience with me. He is very patient 
with me. We are good cop/bad cop, and he is definitely the good 
cop. [Laughter.] 

Senator Portman. Well, again, it has been very productive over 
the last year during this investigation, and I think we have seen 
here today, one, some practices that you have specifically under- 
taken which are going to help improve the customer experience and 
customer service. I do not think it goes far enough, as we talked 
about, in terms of providing actual refunds to customers who have 
been overbilled. I understand some have been underbilled, some 
have been overbilled, but that does not help the family that has 
been overbilled, and it is not fair. 

With regard to your testimony generally, though, it sounds like 
there are also some other customer service policy changes you all 
are considering based on this hearing and our investigation, and 
that is appreciated. 

On the RSN fee, I would just say this is, again, for people who 
are not familiar with, it is the Regional Sports Network fee that 
you are charging. You choose to put it on the bill separately. You 
could put Cable News Network (CNN) on the bill separately if you 
wanted to. But my concern about it is that it does appear in some 
bills with some of the companies in a place where it looks like it 
is a government fee, and I would again hold up this bill from Ohio, 
which is, the bill that I get, my wife, Jane, and I get, and it says, 
“taxes, fees, and surcharges,” and it has franchise fees. State sales 
taxes, FCC regulatory fee, FCC regulatory fee voice. Universal 
Service Fund, regulatory recovery fee, Ohio TRS recovery fee, and 
then it has broadcast TV and sports programming, which is where 
the RSN is. And I do not think that is the right place for it because 
then people view that that that is a mandatory government fee like 
the other ones. 



39 


So I would ask you, Ms. Mayo, are you aware of that? And with 
regard to your legacy Time Warner customers, I understand you do 
not charge it separately, but with regard to your new customers 
you are now taking on, do you plan to keep this in the category of 
fees and other government charges or to have this in a more, I 
think, honest display where it is either by itself or with other fees? 

Ms. Mayo. So I am aware of it now, and, yes, our intention is 
to overlay Charter’s business practices with Time Warner Cable, 
and we do not charge an RSN fee, so hopefully that will be some- 
thing that will be removed entirely from the bill. 

Senator Portman. Well, again, I appreciate the fact that we have 
been able to talk about some of these very specific issues that I 
hear from my constituents about and you hear from your customers 
about, and I appreciate the fact that everybody has been very can- 
did today in talking about this. 

Let me also mention, because Senator McCaskill mentioned it, 
that with regard to the oversight responsibilities here, to the ear- 
lier comments made, this Subcommittee has done significant over- 
sight of exactly what Senator Paul was talking about — in other 
words, looking at government, looking at our economy, which is, 
disappointingly weak, looking at government spending. Specifically, 
we have had a series of investigations and hearings on issues like 
tax reform, which goes directly to economic growth. We have had 
hearings on the Affordable Care Act (ACA) and a lot of the waste 
and taxpayer loss specifically that relates to the co-ops, and we 
have done some great work on that. 

We have also, though, looked into other issues like labor traf- 
ficking and the Health and Human Services (HHS) and how they 
allowed kids to get into the hands of traffickers, certainly govern- 
ment oversight there. 

Next month, we will be combating — looking at ways to combat Is- 
lamic State of Iraq and Syria (ISIS) propaganda and, again, looking 
at our government response to that. For those of you following 
what we do, that will be something we will be looking at next 
week, certainly a topical issue and one that everybody is very con- 
cerned about: How do you stop this ISIS propaganda from taking 
more and more of our impressionable young people who feel alien- 
ated and radicalizing them. 

Then we are also going to look at this opioid abuse issue, which 
is at epidemic levels. This is the heroin and prescription drug epi- 
demic around the country and some specific issues that we think 
this Subcommittee can provide some additional insights on. So we 
have done tough, significant, important oversight, and we will con- 
tinue to. 

Again, I appreciate the witnesses coming here today and the fact 
that this process, not just the hearing today but the investigation, 
has improved some of your individual practices as it relates to the 
people that we represent. 

I want to thank Senator McCaskill again for her work on this 
issue over the years. This is not, as you can tell, her first time deal- 
ing with this issue. I am not on the Commerce Committee, but she 
has done a lot of work on this issue and focusing on consumers 
there. And as we move forward, again, we are going to continue to 
look at the industry and look at this issue of consumer choice and 



40 


competition. I do think ultimately that is the answer, is to give peo- 
ple a range of choices. We have talked today about there is com- 
petition, but there are also some concerns about having more com- 
petition. 

I think innovation is going to be allowed to flourish and new 
products are going to come to market, and consumers are going to 
be better off when there is competition. So we will be looking at 
some of those barriers to that. And we will also be looking at other 
issues that might have come up today. 

I will have some additional questions for the record. 

I appreciate the prompt responses you have given us to previous 
questions. And specifically to the companies who are here today, I 
thank you for your willingness to cooperate with us in this inves- 
tigation and, again, what I think has been a positive hearing to 
have an honest airing of some of the concerns on the consumer 
side. 

The hearing record will remain open for 15 days for any addi- 
tional comments or questions by any of the Subcommittee mem- 
bers, and with that, this hearing is adjourned. 

[l^^ereupon, at 12:03 p.m., the Subcommittee was adjourned.] 



APPENDIX 


Hearing op the Permanent Subcommittee on Investigations 
‘‘Customer Service and Bilung Practices in the Cable and Satfxlite Television 
Industry” 

June 23, 2016 

Opening Statement of Chairman Rob Portman 


This hearing will come to order. 

We arc here today to discuss a subject that affects, and occasionally frustrates, families 
all over America: your cable or satellite 'I'V service. For more than a year now, Senator 
McCaskiM and I have undertaken an investigation of the cable and satellite television industry. 

As many of you know, Senator McCaskill has been interested in this issue for many years, from 
her role on the Commerce Committee. We both have a keen interest in making sure cable and 
satellite companies do right by their subscribers. 

The Subcommittee reviewed thousands of documents, and interviewed countless 
witnesses, to learn more about the consumer practices of five of the largest pay-TV providers: 
Comcast, Charter. Time Warner Cable, Dish Network, and DirecTV. Together, these companies 
serve more than half of all American households, and nearly three-fourths of those that pay for 
television programming. 

Today’s hearing will focus on those companies’ billing and customer-service practices. 
Our joint report outlines troubling findings about the practices of two cable companies that have 
con.sistently/a//e£:/ to provide refunds to customers who they know they have overcharged, 
including thousands of people in my home state of Ohio. I’ll describe those findings in just a 
minute. The second is a report issued by Senator McCaskill on a number of issue.s of interest to 
consumers: how pay-TV companies disclose their prices; what those fees are for; and how they 
teach their employees to interact with and retain customers. 

And without objection, those reports are ordered to be made part of the record. 

During the course of the Subcommittee’s investigation, we discovered something about 
refunds I found hard to believe. As everyone with a cable or satellite subscription knows, when 
your bill arrives every month, it often has a long list of charges on it: A base charge for your TV 
package; maybe $10 extra per month for IIBO; and equipment fees and surcharges for the set-top 
boxes you rent. 

Given how many millions of people get television service from these companies, it’s 
inevitable that from time to time a customer will wind up being charged for something by 
mistake. The same thing happens sometimes in the grocery store check-out aisle, Mistakes 
happen — we ail understand that. What matters in life is how you own up to your mistakes and 
make things right. What we discovered is that some cable and satellite companies are better at 
that than others. 

All of the companies before us have ways of identifying overcharges to customers or 
preventing them from happening in the first place. But what happens when they find out they've 

1 


( 41 ) 



42 


been overcharging someone for equipment they don’t actually have? The first thing to do, of 
course, is take it off the customer’s bill going forward. All the companies before us know to do 
that. But not all of them bother to go back and figure out when the overcharge started, calculate 
how much they owe the consumer, and give them a refund. 

During the time period examined by the Subcommittee, Time Warner Cable and Charter 
Communications — who have just recently merged with each other — made no effort to trace 
equipment overcharges they identified and provide refunds to customers. Instead, their practice 
has been to just poeket the past overcharges. 

To understand the scale of the problem, we asked Time Warner Cable for specific 
numbers about overcharges in our home states. Here’s what we found: During Just Xhe first five 
months of 2016, Time Warner Cable overbillcd up to 1 1,000 customers in Ohio — and those 
overcharges totaled $108,000. Time Warner Cable further estimates that, throughout last year 
alone, it overbilled 40,000 Ohio customers with overeharges of more than $430,000. And rather 
than correct the mistake by refunding the overcharges, the company Ju.st kept money. In my 
view, that is a rip-off of Ohio consumers, and f II be asking the company today how they are 
going to fix it. 

Specifically, when Time Warner Cable discovered the overcharges, it only dealt with the 
problem prospectively, it took erroneous charges off customers’ bills going forward, but did not 
provide any backward-looking refunds and did not even provide notice to customers so they 
could investigate the problem themselves. They Just kept the money. Based on data provided to 
the Subcommittee, Time Warner Cable will overbill its customers nationwide an estimated $2 
million for equipment charges in 2016, and, even after discovering those billing errors, will fail 
to do the work required to offer a full refund. 

Time Warner Cable has recently been acquired by Charter Communications. So I’m 
hopeful that the new company will work quickly to fix this problem. 

But Charter has had problems of its own. Until August 2015, the company did not run 
any ,systematic audits to reconcile its billing records with equipment records. That means that 
overcharged customers could not even receive a prospective correction of their bill unless they 
spotted the problem themselves and contacted Charter. Just recently. Charter began taking steps 
to identify equipment overcharges currently on its system. But even though it has identified 
overcharges, removed erroneous charges from future bills since August 2015, until today, 

Charter has not provided any refunds or notice of the problem to consumers — ;just like Time 
Warner Cable. 

It does not have to be this way. Our investigation revealed that Comcast, DirecTV, and 
Dish have had much better practices. Comcast and DirecTV provide automatic refunds or 
credits to customers w'ho have been overcharged by their billing systems, while Dish’s billing 
system is designed to prevent these types of overcharges from occurring in the finst place. So 
feasibility is just not a good excu.se for failing to refund customers when you’ve overcharged 
them. 



43 


We do have some good news to report today. As a result of our investigation, Charter 
and Time Warner Cable have taken steps to improve their practices, fime Warner performs a 
monthly audit to find overcharge.s. Going forward, the company will provide an automatic one- 
month credit to all customers for each piece of overbilied equipment or service, and it will 
provide notice to overbilled customers so they can determine whether to request a credit or 
refund. That is a good start but it does not make customers whole. Time Warner Cable has not 
yet committed to do anything for the 40,000 Ohio customers, for example, who were 
overcharged last year. And we will get into that discussion today. Charter has announced that 
starting today it will provide a one year credit to all affected consumers. This goes further to 
make customers whole but what would be better is to simply ensure that customers receive the 
full refiinds they are do. 

Senator McCaskill’s report shows that Americans are often unhappy with their cable and 
satellite service. Questionable cu.stomer service techniques and confusion surrounding billing 
practices have led consumers to feel mistreated. I support her effort to get to the bottom of those 
issues, and I believe that the be.st solution to the problem of poor customer service is more 
competition in the pay-TV industry. Regulations have their place, but what’s really needed is for 
consumers to have a more options — more competition in the market. If you do not like your 
television service provider, you should be able to choose a different provider that suits your 
needs and preferences, and Senator McCaskill and I are both interested in continuing to examine 
how this industry can be improved to create more choice for consumers. 

1 want to thank Sen. McCaskill for her hard work. She has always been a stalwart friend 
of consumers. She and her staff have work with us in a professional and productive manner to 
make today possible. 


3 



44 


Customer Service and Billing Practices in the Cable and Satellite Television Industry 

June 23,2016 
Senator Claire McCaskill 

Opening Statement 

Thank you, Chairman Portman. 1 am glad we were able to work together on this 
investigation and the joint report. With your consent, I’d also like to enter the Minority Staff 
report into the hearing record. 

This morning, for the first time, representatives of our nation’s largest cable and satellite 
companies are testifying together before the U.S. Congress about their customer service and 
billing practices. They arc here because this Subcommittee has broad Jurisdiction to investigate 
issues which affect the American people. And few other industries touch a.s many Americans as 
the companies that provide them with television. 

The five companies here today provide video services to more than half of all American 
households. They enable more than 71 million subscribers and their families to receive news, 
entertainment, and other programming. And while we may love watching our shows, we don’t 
love our cable and satellite bills - and we hate dealing with the cable and satellite companies. 
Although the companies have made some gains in the last year, paid TV providers remain among 
the most disliked industries in America, This year, a survey of consumers found that more than 
20% of the people who had interacted with TV providers reported having a bad c.vperiencc 
during the previous six months, the highest level of any industry. 

Over two years ago, 1 called my service provider about a $10 charge on my bill, I learned 
that 1 was paying a fee that the company was no longer charging its newer customers and that the 

I 



45 


company would immediately remove the charge on my bill. I also learned that the only way that 
1 could have known about this and gotten the fee removed was to do exactly what I did and call 
the company. Had it been up to the company, I would have been paying that fee forever. This 
experience prompted my interest in how these companies treat their customers. 

Just this week 1 called my other service provider to ask to remove the .$7.99 fee that Ihn 
paying for a protection plan. The agent I spoke with insisted that it would cost me $10 to remove 
the fee from my bill. I asked repeatedly about why I needed to pay a fee to stop paying a fee. 
Finally, I threatened to quit and the agent transferred me to a retention agent who told me that, 
no, 1 didn't need to pay a $ 1 0 fee because I had had the plan for more than a year. Had 1 stayed 
on the phone with the first agent, I would have been stuck paying that fee. 

I tell you these stories because I have had personal experience with the kinds of problems 
we uncovered in our investigation. 

We found that customers are being charged a host of fees that are not included in 
advertised pricing, some of which are for programming that used to be included in a customer’s 
video package. We also found that, just as many customers have long believed, some of these 
fees, like the HD and DVR service fees, aren't a true reflection of the cost to the company of the 
service, but rather are based on the revenue goals of the company, and the price a customer is 
willing to stomach. In fact, some of these fees arc charged to old customers while new 
customers get the same services free of charge. Existing customers may not be informed of this, 
and when they finally do find out they have to call and complain in order to get the fee taken off 
their bill. 


2 



46 


We found that the customers who called for help on their accounts face agents whose job 
it is not just to solve the customer's problems, but to sell them additional services. At one cable 
company, even when the customer called in to ask about why their bill was going up, the 
company told them QUOTE “[t]he price adjustment brings with it an opportunity to upsell 
customers.” And these agents are compensated, in part, based on their ability to sell you more. 

Then, if customers decide that they want to cancel their service, they have to jump 
through more hoops. Although all the companies here today allow people to sign up for service 
or upgrade their service online, none of them provide customers an option to cancel service 
online without speaking with company representatives. And if they call, they have to speak to 
retention agents, like the one 1 spoke to this week, who are trained to prevent the customers from 
canceling. Even when customers say they don’t want to have this discussion, the agents are 
expected to ask questions about why the customer is canceling. If the customer objects to the so- 
called “solution” offered by the retention agent, then the companies tell their agents, QUOTE 
“[ejustomer objections arc really just opportunities to further educate them.” And QUOTE 
“objections are not the end of the convensation.” 

Customers trying to save money by lowering their level of service are often routed to 
these same agents, and should be prepared to negotiate aggressively. We found evidence that 
these companies train their agents to question customers’ decision to drop channels, and make 
offers in a “top-down” fashion, so that customers must push repeatedly to gel the best deal. 

Finally, we found that two of the companies have failed to provide their customers with 
notice that they have been overcharged or refunds of past overcharges. Time Warner Cable 
estimates that, in 2015, it overbilled 4,232 Missouri customers a total of $44, 152, and Charter 


3 



47 


estimates that it has annually overcharged approximately 5,897 Missouri customers a total of 
$494,000 each year. 

One thing customers want to know is WHY cable companies’ customer service is so bad. 
The short answer, of course, is that for too long there hasn’t been any real competition. In its 
latest competition report, the FCC estimated that about 61% of U.S. homes only have the choice 
of one cable company or the satellites if they want to watch television. We plan to continue our 
investigation of competition issues in the pay-TV market, and I look forward to reporting our 
findings in the coming months. 

1 want to acknowledge the cooperation we received from all of the companies represented 
before us today, as well as acknowledge that they have all made commitments to improve their 
customer service. Unfortunately, our investigation suggests that there is a long way to go, 

I thank the witnesses for their testimony. 


4 



48 


Page 2 of 4 


September 20, 2014 



Account: 
Security Code: 



Previous Balance 271.W 

Payment ' Thank You 09/03 -271.58 


Payments received after 09/20/14 will appear on your next bill. 

Adjustments 

CIIAPlhR BUNDLL DISCOUNT 09/2Q -20 00 

Adjustments Total -S20 00 


Remaming Balance 420.00 

Service from 10/01/14 through 10/31/14 
^ Charter TV« 


Digrta! Home includes; 66.99 

Basic. Exparxted, Drgitat Receiver Interactve 
Services 

Digital Receiver 6.99 

and interactive Services 

DVR Receiver Upgrades and Serwce 30 00 

at $15,00 each 

Digital View 5.00 

Prwnium Pkg 40.00 

Showtime & Movie Channel, HQO & Cinemax, STARZ 
4 Encore 

Sports View 1000 

sis«.9a 

Taxes Sales Tox 1.25 

Fees & Charges Broadcast TV Surcharge 5.00 

FCC Admin Fee 0.09 

Franchise Fee 6 69 

$15.03 

Charter TV® Total SI 74 01 


Charter 

Contact Us 

visit us at charter.com or cati 
1-888-GET-CHARTER (1-888-438-2427) 

86X4 QUO NO RP 20 09212014 YNNNNYNN 01 005419 0019 


iSharter InterneWo 


Internet Service 


47,99 

Inlem^ Modem Lease 

9.00 



$56.99 

Taxes 

Sales Tax 

0 75 



$0-75 

Charter Infemet® Total 

S57 /4 

Charter PhoneC'?') 

Phone number {636) 

Ur^tmited Long Dist^ce 

39.99 

tndudes: Phone Lino, Modem, 10 Calling Features, 
Unlimited 6 Statewide Calling 


Voice Mail - Basic 


0.00 



$39.99 

Taxes 

Federal Excise Tax 

0.23 


Telephone Sales Tax 

3,06 

Fees & Charges 

Line Access • Primary 

7.50 


Federal Universal Service Fund 

2.34 


Regulatory Cost Fee 

0.36 


State Deaf Tax Surcharge 

0.08 


State Universal Service Fund 

0 05 


State PUC Fee 

0.03 


CfHjntyE911 Surcharge 

1,35 


Local License Tax 

1 43 


$16.43 


For additional call details end terms of service pteass visit 
www.chorter.com/coltdetails 

Charter f^rmno® Total Sf'B.42 


Other Charges 

Wire Maintenance 4,99 

Other Charges Total 54 99 



C«ritinu«e on v« noKt pag«. . .. 


Locaf Charter Store; 1015 Washington Sg, Ste C, Washington MO Store Hours: Mon thru Fri - 9:00am to 6:00pm: Closed Sat 


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49 


HEARING BEFORE THE SENATE PERMANENT 
SUBCOMMITTEE ON INVESTIGATIONS 

June 23, 2016 

Testimony of Tom Karinshak 

Senior Vice President of Customer Service, Comcast Cable 

Chairman Portman, Ranking Member McCaskill, and Members of the Subcommittee, 
thank you for the opportunity to be here today. My name is Tom Karinshak. Since November of 
2010, 1 have served as the Senior Vice President, Customer Service, at Comcast Cable. Among 
other things, I oversee our call center operations, including our phone, chat, and social media 
representatives. In a nutshell, my leadership team’s job is to give our frontline employees the 
tools and training to be responsive to the questions and needs of our customers and potential 
customers who call and email us every day. 

Comcast welcomes the Subcommittee’s interest in customer service and billing practices 
in the pay TV industry. 1 look forward to providing an overview below, and also want to thank 
your staff for the courtesies extended to us throughout their review. I had the opportunity to 
meet with them late last year at which time they provided us with a greater understanding of your 
concerns, some of which we’ve already taken direct actions to address. 

At Comcast, we understand why we are here. We and the industry as a whole have not 
always made customer service the high priority it should have been. We regret that history and 
have committed to our customers that we will lead the way with initiatives to change it; we are 
committed to making every part of our customers' experience better, and we have already begun 
to do so. In short, we are committed to making eustomer service the best produet that Comeast 
offers to its customers. We believe that we are fortunate to be invited into people’s homes to 
entertain and educate them, to connect them to their friends and family, to help them with their 
homework, and to allow them to unwind after a long day at work. None of that is possible when 
you can’t get a que.stion about your account or service answered quickly; or when it takes 
multiple calls to get help fixing a bill or a service problem; or when you have to miss work 
waiting for a technician who doesn’t come during his or her scheduled appointment window. 

There are lots of historical reasons that provide an explanation for why these issues 
existed. They range from the evolution of the industry as it has grown from a series of locally 
franchised cable systems with different billing and customer-facing systems, to the complexity of 
the products being offered, to a complicated web of regulation at every level of government. 

But we are not here to make excuses. Improving customer service is imperative not only 
because it’s the right thing to do and our customers deserve it. It’s also imperative because the 
competitive marketplace in our industry w'ill make any other outcome untenable. 

While we still have much to do. I want to assure you we are working to make our 
customer service work for you and all of our customers. Our goal is simple. We want every 
customer to have an exceptional experience with us — from the moment they order a new service. 


1 



50 


to installation, to the way we communicate with them and bill for services, to how we respond to 
issues. To that end, we’ve begun a wholesale effort aimed at transforming our customer 
experience. 

The foundation of that effort is what I like to call the Comca.st Customer “Bill of Rights.” 
These are the core principles that are guiding our customer service revamp. I’d like to lay those 
principles out for you: 

■ Investing in Training and Technology for all Employees. 

• Giving All Customers Access to Products and Services that Work Best For Them. 

• Ensuring a Fair Price for All of Our Customers. 

• Being on Time and Minimizing Wait Time, All the Time. 

• Giving Customers Control over Their Comcast Experience by Enabling Self Service 

Whenever Possible. 

• Keeping Bills Simple and Transparent. 

• Reassessing Policies and Fees That Frustrate Customers. 

• Crediting Customers Proactively for Outages and Billing Errors. 

• Allowing Customers to End Their Service Without a Hassle. 

• Measuring Our Employees on Customer Satisfaction. 

These are not empty promises. Comcast is spending an incremental $553 million' this 
year alone on improving the customer experience. Included in these expenditures are the 
creation of 5,500 new customer service jobs over three years all here in the United States, 2,000 
of which are located at our new or soon to open centers in Albuquerque, New Mexico. Spokane, 
Washington, and in Tucson, Arizona. Having served on active duty in the U.S. Army for six 
years, Fm also particularly proud of our efforts to increase the hiring of military veterans and 
their families, both for the.se new positions and many others. We’ve committed to hiring 10,000 
reservists, veterans, and their spouses or domestic partners between 2015 and 2017 and are on 
track to meet or beat that goal. 

We are also committed to ensuring that when our customers speak to Comcast 
representatives, they are speaking to representatives that have received comprehensive and 
consistent training. As we’ve told the Subcommittee staff, training and feedback for our 
customer service and retention representatives are constant. As an example, we recently 


This number includes more than $300 million in spending on operating expenses and additional spending on 
associated capital expenditures related to improving the customer experience. 

2 



51 


completed peer-led training sessions with nearly 80,000 employees about the customer 
experience and how each and every employee plays a role in our transformation efforts. We’ve 
also overhauled our training by rolling out the Net Promoter System (NPS), which is the gold 
standard in consumer-facing industries. NPS is based on one simple question: how likely is a 
customer to recommend Comcast services? Our call center personnel get real-time feedback 
from the system and managers are able to quickly learn about potential issues. So far, we ve 
seen quick and meaningful improvements in customer satisfaction where NPS is being used, and 
we are continuing its roll out in all of our footprint. In Portland, Oregon, w'e’ve seen customer 
satisfaction improve by 21 points and employee satisfaction improve by 40 points, since the NPS 
program’s inception. 

1 will address many of our initiatives in additional depth during the remainder of my 
remarks. For now, let me note that while there is still a long way to go, we are seeing real 
improvement. Our customer .service satisfaction numbers are up 11.5 percent since 2014 and our 
customer dissatisfaction numbers are down 20% in the same time period. We have experienced 
a 35% reduction in customer calls to agents since the end of 20 1 3, and that reduction was driven 
by a 27% reduction in the number of customers who need to call us back. Our on-time arrival 
rate for technician appointments — using only a two-hour appointment window — reached an all- 
time high of 98.9% in Ql 2016. 

I. Retention/Sales Issues 

We believe that we offer our cu.stomcrs the best products and the best value in the 
industry. In the vast majority of cases, when a customer calls and says that she wants to cancel 
her service, she is calling because she has encountered a particular issue with her service that we 
haven’t yet resolved. Our retention representatives are trained to help resolve those concerns. 
And because we do that more often than not, more than 80% of all customers who speak to one 
of our retention specialists do not disconnect their service. 

Our retention specialists receive extensive training — six weeks — before they even start 
on the Job. They receive regular “refresher” trainings throughout the year, including through 
one-on-one coaching sessions, and monthly and annual evaluations by their supervisors. 

While we want to preserve all of our customer relationships if possible, our .specialists are 
trained to process customer requests to disconnect and downgrade their service as quickly as 
possible when this is the customer’s wish. 

We’ve heard and appreciate the Subcommittee’s concerns about this topic. In response to 
those concerns, we’ve provided additional guidance to our retention representatives about the 
disconnect process for our customers and continue to work on ways to further streamline 
disconnect requests. For example, we’re piloting a program to make it easier to cancel service 
online. As part of the pilot, customers can now log on, enter a request, and cancel their service. 
We follow up by phone within two days Just to verify the request, which we have to do for 
privacy and identity protection reasons (e.g., to verify the identity and credentials of the 
individual who canceled the account), and we w’ill even make arrangements for them so all they 
have to do is drop any equipment they have at a local UPS store and have it sent back to us at no 


3 



52 


charge. We are continuing to explore other ways to make this process even simpler for our 
customers. 

In all cases, our goal is to ensure that our customers — even those who are leaving — have 
a positive experience. We think that's why over 35% of cu.stomers who leave Comcast return 
within 12 months. 

We have also heard the Subcommittee’s concerns about customers who threaten to quit 
getting better deals. Comcast believes our standard rates provide customers with a fair price, and 
as a result we do not have “special offers” or discounts for customers who threaten to disconnect 
their service.^ Our retention specialists work with customers to find the best package for the 
customers’ needs. Sometimes, that is a package with fewer services or channels that costs less. 
Other times, it’s a bundle that includes an additional product or service. In all events, our 
retention specialists ask questions to try and learn about how a customer wants to use our 
services so that they ean be matched with the best possible set of products and services. 

U. Billing/Fees 

We are also working to simplify billing and provide greater consistency and transparency 
to our customers. We offer our customers up to four “core” products (video, Internet, phone, and 
home security), and there are dozens of permutations within each product, ranging from whether 
you order a pay-per-view movie that month, to the speed of your Internet, to your video 
programming package. In addition, there are multiple fees and surcharges that we assess and 
collect on behalf of local, state, and the federal government that appear on the bill. Add on the 
fact that our products are already some of the most complex products in the home, and it’s 
understandable why there has been confusion. To be sure, our bills were not always as clear as 
they should have been. That’s why we’ve worked to streamline bills, remove unnecessary 
charges and items, and reformat our bills so that the bottom line is clear to our customers. 

Customer confusion over billing results in significant costs to us. It dramatically 
increases the number of customer calls that wc receive, and our own data shows that it’s a major 
source of dissatisfaction among our customers. And we are very aware that customers who have 
billing issues with their providers can and do change their providers. 

That’s why we’ve undertaken a number of initiatives to make our customers’ bills as 
accessible and as easy to understand as possible. 

• Where customers have shared with us their email addresses, we send them email 
summaries of their order and their resulting bill as soon as they order service or make a 
change to their existing service. 

• We send all new customers and customers on a new rale plan a “video bill,” a short, 
personalized video that explains everything customers need to know about their bill, 

^ Indeed, a recent article in Consumerisl noted that customers who have “tried to negotiate better TV or triple-play 
rates with Comcast [say that] the calls are ending (] with rates unchanged.” See Kate Co.\, The 3 Big Things We've 
Learned .Vbout Your Cable Bill. CONSUMERIST (May 17,2016), availahie al 
https://consumerist.eom/2016/05/1 7/the-3-hig-things-weve-learned-about-your-cable'biii/. 

4 



53 


including information about all fees and regulatory charges, including their first month’s 
price, monthly price, the meaning of various recurring fees and charges, proration and 
non-recurring charges, and information about how to auto-pay. 

• Our popular “My Account” app enables customers to easily access their account 
information, see any new charges or credits, pay their bill, receive updates on their rate 
plan and even troubleshoot technology issues. We also give customers the opportunity to 
view and pay their bills through their XI set-top box and are working to give customers 
even more choices. You can even schedule an appointment for a Comcast representative 
to call you at a time that is convenient for you, rather than waiting on hold. Over 4 
million customers are already using the app, and more than 9 million are using our self- 
service options. 

• When a customer logs in to our website, we prominently and clearly highlight the total 
amount that they owe on their next payment, without having to click to a special page. 

We have also dedicated ourselves to training our customer service representatives to 
summarize every customer’s order, including all fees and charges. And to ensure that this 
training is followed, it’s an important component of all customer-facing representatives’ monthly 
and annual evaluations. 

We also offer all customers a 30-day money back guarantee. Comcast honors this 
guarantee for any customer who wishes to cancel any new product or service. This policy helps 
to ensure that no customer is locked into services or equipment if he or she is not completely 
satisfied with the service or the rates and fees charged. 

We do offer time-limited promotional rates in certain circumstances. These prices are a 
by-product of the highly competitive marketplace for all of our services. We are competing to 
win business away from our competitors, and they are certainly competing to take business away 
from us. Those promotions benefit consumers by providing them with lower prices and the 
opportunity to experience a different product line during the promotional period. 

We’ve worked to simplify and limit the number of promotional rates that we offer in a 
particular market. Our customer service and retention representatives are trained to identify for 
cu.stomers the duration of their promotional rate. At the time they sign up for a promotion, 
customers who provide us with an email address receive a summary of their bill that includes 
notice of the end-point of their promotional rate. Our written advertising materials also clearly 
state the current post-promotional rate so that the customer knows what their rate would be if 
they retain the same level of service. 

III. Fees and Surcharges 

Depending on the services a customer receives, there can be a large number of ta.xes, fees 
and surcharges on a customer’s monthly bill. This stems mainly from offering products that are 
heavily regulated at the local, state, and federal levels, including dozens of assessments that we 
collect from our customers for governments. Comcast does not mark up or profit on these fees. 


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in recent years, a number of pay TV providers, including Comcast, have begun breaking 
out and separately billing standalone charges to reflect the increased costs associated with the 
carriage of certain sports networks and the retransmission of broadcast stations’ signals. Those 
particular costs, along with the costs of programming generally, have been skyrocketing in recent 
years. From 201 1 to the present, program costs have increased each year between 6 and 8.5%. 
We decided to separately bill those increased costs — as opposed to simply raising our sticker 
price — so that our customers would have complete transparency into why their bills were 
increasing. Indeed, these costs are increasing so rapidly that the amounts that we are now 
charging do not cover either the programming fees we pay to regional sports networks or the 
retransmission consent fees we pay to broadcasters. As the same Consumerist article that 1 
referenced earlier states, Comcast was the pay-tv provider that struck the best balance between 
transparency and clarity. 

Because of our long history of being subjected to FCC-mandated rate regulation, we base 
fees for equipment like remote controls and services like installation associated with its basic 
cable service on the actual cost of providing the equipment or service. Under this historical 
regulatory framework, these rates are established using a formula that includes the actual cost of 
the equipment or .service to Comcast plus a specified margin for expected service 
calls. Specifically, we e.stablished an “equipment basket” that includes “direct and indirect 
material and labor costs of providing, leasing, installing, repairing, and servicing customer 
equipment,” See 47 C.F.R. § 76.923. Permitted charges for equipment are then calculated based 
on the equipment basket costs. These calculations are documented in Form 1205, which is filed 
annually with the FCC. Comcast recovers through associated fees less than 1 00% of its costs in 
supplying this equipment and providing these services. 

Other fees and charges relate to optional add-on services like our DVR service or for 
enabling HD technology. By charging for these services on a standalone basis, we allow 
customers who do not need or want them to bypass the associated charges, which they would 
otherwise bear in part if the costs were simply bundled into our standard rates. And our new 
“Partner Program” enables customers to access our programming through third-party set-top 
devices and smart TVs, avoiding the need to rent a set-top box from us. We’ve already entered 
into an agreement with Roku that will allow our customers to access their cable TV .service via a 
Roku streaming player or directly on a Roku TV, 

We’ve also recently stopped charging for fees, to further simplify our customers’ hills. 
For example, we no longer charge change of service fees. 

IV. Recent Initiatives 

As 1 referenced at the beginning of my remark.s, we are in the midst of transforming our 
customer experience. In 2015, we announced a new, multi-year plan to reinvent the customer 
experience and to create a culture where all employees are focused on exceeding our customers’ 
expectations, at all levels of the company. That plan was informed by our review of customer 
service data, including our as.se.ssment of surveys and customer complaints. We also received 
input from our customer service representatives about what worked and what didn’t, and the 
tools that they needed to better address our customers’ needs. 


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The core elements of the plan include: 

• Creating more than 5,500 U.S.-based customer service jobs over the next three 
years; 

• A goal to be on time for customer appointments all the time or we automatically 
credit a customer; 

• Major investments in technology and training to give employees the tools they 
need to deliver excellent service; 

• The renovation and opening of hundreds of retail stores across the country; 

• The development of new customer-facing technologies that will enable customers 
to interact with us how and when they wish. 

For example, we are currently rolling out a new, cloud-based platform that gives 
employees a better, holistic view of the customer's account history so they have everything they 
need at their fingertips to help customers faster and you won't need to start over each time you 
talk to a different agent. We’re also enabling scif-.service whenever possible to give customers 
the same tools our agents have. 

We are also redesigning all of our retail stores and opening many more, adding staff and 
introducing new capabilities like intelligent queueing that allows customers to re.serve a place in 
line from their mobile phone, to cut wait times. 

We have rolled out an initiative to credit customers $20 automatically if a technician does 
not arrive on time for an appointment for any reason. In addition, we’ve hired hundreds of 
additional technicians and brought our dispatch operations in-house in order to reach the goal of 
always being on time for cu.stomcr appointments. And our tech tracker tool allows customers 
with scheduled appointments to receive alerts when one of our technicians is about 30 minutes 
away from arriving at the cu.stomer’s house, and to track this technician’s progress on a map. 

This prevents our eustomers from needing to just sit at home and wait for an appointment. 

Other reeent innovations designed to improve our customer service experience include: 

• Launch of an interactive troubleshooting guide within the “My Account” app, which 
takes customers through steps designed to help fix whatever issue they are having on 
their own, without needing to make an appointment to see a technician; 

• A unique partnership with UPS Store and Amazon to allow for the easy and free 
return of equipment when a customer cancels their account; 

• Deployment of a 125+ person social media team to handle individual customer 
issues; 


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• Standardized and improved call forecasting and workforce management practices to 
help ensure the right number of agents are available at any time; 

• Deployment of email confirmation messages for customer orders and when we issue a 
credit to their accounts; 

• Development of Xfmity TV apps that enable our customers to directly access our 
content on TVs and other third-party devices throughout their home, without the need 
to lease a cable set-top box; 

• Launch of our One Transfer tool, simplifying and improving the experience if the 
agent has to transfer the call to a specialist or to handle another customer need; and 

• Outfitting of all technicians with iPhones to streamline in-home visits. 

We’ve also conducted a 360 degree review of our billing policies to make sure that our 
practices put our customers first. For example, we’ve extended the time period during which 
customers can dispute a charge on their bill from 60 to 120 days, empowered our front-line 
agents to issue up to $100 in credits on-the-spot, and afforded customers who say that they 
returned equipment the benefit of the doubt without requiring a receipt. 

While we believe that these and other steps we’ve taken to improve our customer 
experience are making a real difference, we also welcome the opportunity to work with the 
Subcommittee on other areas that it identifies as occasions for additional improvement. 

Thank you for the opportunity to testify today. 1 am happy to answer any questions that 
you may have. 


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"^Time Warner Cable® 

Opening Statement of John Keib, 

former Executive Vice President and Chief Operating Officer, Residential Services, 
Time Warner Cable Inc. 

Hearing before the U.S. Senate Permanent Subcommittee on Investigations 
“Customer Service and Billing Practices in the Cable and Satellite Television Industry” 

June 23, 2016 

Chairman Portman, Ranking Member McCaskill, other members of the Subcommittee, 
good morning. My name is John Keib, and I am here today to testify on behalf of legacy Time 
Warner Cable Inc. Thank you for the opportunity to participate in this hearing. 

As you know, Time Warner Cable recently merged with Charter Communications and 
Bright House Networks to form a new company. My role at Time Warner Cable ended when the 
parties completed these transactions; I am no longer employed by Time Warner Cable or 
Charter. As such, I am testifying today as a former Time Warner Cable executive, but also as a 
private citizen. 

My most recent position at Time Warner Cable was Executive Vice President and Chief 
Operating Officer for Residential Services. In this role, I led the service delivery, customer care, 
marketing, and sales operations for the company’s residential services business. I am here today 
to discuss legacy Time Warner Cable’s business prior to its merger with Charter, Hence, to the 
extent that questions arise relating to the future of Time Warner Cable or Charter, I will defer to 
Charter’s witness, Kip Mayo. 

Legacy Time Warner Cable serves approximately 15 million customers receiving video, 
Internet, or telephone services in 29 states ranging from Ohio to Maine to Nebraska. We employ 
thousands of customer service representatives and field technicians whom we train, first and 
foremo.st, to serve our customers. 

Let me begin by acknowledging that we arc well aware of some of the issues that will be 
discussed by the Subcommittee today. Those of you who live in Time Warner Cable areas have 
probably seen our most recent ad campaign in which we acknowledge - indeed highlight - prior 
service challenges before explaining the steps we are taking as a company to address those 
historical shortcomings. 

That campaign is the culmination of efforts made, during my tenure at Time Warner 
Cable, to improve our customer service performance in order to provide the best possible 
experience to our cu.stomers. Time Warner Cable, like other MVPDs, has struggled with its 
customer service rankings in the past. Beginning in 2013, under an interna! strategy we called 
“Winning on Service.” Time Warner Cable embarked on an aggressive plan to improve its 
customer service and took several steps toward that goal. We invested heavily in our network 
and made several technology augmentations for broadband and video. We also initiated an 
ambitious plan to reshape our customer service performance by investing in our greatest asset, 
our employees. Our goal was to make service the differentiator and to become the best service 
provider not just within the telecom space, but in any industry. We believe that investing in 



58 


service and delivering a best in class service experience is the most important factor in driving 
long term customer growth. 

We also have worked hard to minimize billing errors. Three years ago, we implemented 
an automated, industry-leading process designed to detect and fix billing errors whether or not 
they are identified by customers. Each month, we search for and identity- equipment-related 
overcharges and undercharges. And when we find an error, we fix it going forward and provide 
the customer with a credit for the remainder of the billing cycle from the time the fix has been 
recorded. We do not charge customers back for underbills, regardless of their size. It is 
important to keep in mind that we have 37 million pieces of equipment in service at any given 
time, and we are constantly upgrading that equipment with newer devices. Given the volumes of 
equipment we deal with, we are pretty proud of the fact that today, our equipment billing error 
rate for video subscribers is a very small .07% and for internet subscribers, .03%. 

At the same time, for other types of overcharges where we can identify exactly when they 
first occurred, we credit customers back to the origin of the error. While such errors in billing 
for services are unusual, when they occur we generally have been able to provide retrospective 
refunds to affected customers without any need for the customers to request such refunds. In 
contrast to overcharges for equipment, which typically involve highly individualized factual 
circumstances that can be difficult to ascertain from our billing system, it is generally much 
easier to identify the cause and duration of a service overcharge. 

Overcharges represent a very small part of our interactions with our customers. Overall, 
in an average year, Time Warner Cable fields more than 100 million calls from its customers. 
Some of these customers seek to purchase video, Internet, or telephone services for their homes; 
others ask questions about their bills or seek technical support. Still others w-ant to change their 
service. Regardless of the reason for the call, our goal is to keep our customers, and we 
accomplish that goal by keeping them happy. 

To do this, we train our customer service representatives to provide excellent care to our 
customers. Our customer service agents specialize in one or more core functions, including 
sales, retention, service and billing. Upon hiring, our representatives receive 1 1 weeks of hands- 
on training, as well as weekly ongoing training and coaching sessions with supervisors. These 
coaching sessions allow our representatives to learn from actual calls they handle. Our focus on 
customer service has made a difference, as more than four in five customers report that they are 
satisfied with their interaction with Time Warner Cable. And our surveys suggest that customers 
are becoming increasingly satisfied. 

We also have made great strides in addressing customer issues more quickly and 
efficiently. Wc have done this by improving our phone service levels through enhanced training 
and better staffing, improving our product and service performance, and introducing 
appointment-based call backs, which allow customers to schedule call backs from Time Warner 
Cable at times that work for them. As a result of these efforts, our total call volume is down - 
over the past three years, the number of calls fielded by our customer service representatives 
decreased by 12 million , which is a testament to better and more efficient customer service. 

One measure of this improved customer service is known as “one touch resolution” - or the 


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percentage of customer calls that are managed by a single agent. Recent internal reports show 
that we achieve one touch resolution in nearly 94% of the calls we handle. 

In addition. Time Warner Cable began offering one-hour service and install windows 
and, in the first quarter of this year, our technicians were on time for approximately 99% of these 
appointments. We also significantly reduced the need to send Time Warner Cable technicians to 
our customers’ homes to handle a repair. At the time of our merger, approximately 90% of 
repairs could be handled over the phone, up from approximately 82% in 2013. This 
improvement has resulted in a reduction of over one million service truck rolls in the last two 
years. 


Are we there yet? No. Making such changes at a company our size is no small feat and 
the desired changes cannot all happen at once. Still, the evidence suggests that our efforts are 
paying off In the latest American Customer Satisfaction Report, Time Warner Cable’s 
Customer Satisfaction Ratings have increased by 8% year over year for both its television and 
Internet customers. We were recently ranked the 4th best Internet provider in this survey up 
significantly year over year. Although we did not have enough time to fully execute our plan, I 
am proud of the early results just as I am proud of all our technicians and customer service 
agents who are together pursuing a single mission of winning on service. Moreover, 1 am very 
confident that our employees and customers who have transitioned to Charter are in great hands. 
I am confident that Charter holds the same core tenets about prioritizing customer service and 
will continue to take the service experience to new levels. 

I look forward to answering any questions you may have about Time Warner Cable. 


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statement by Kathleen Mayo 
Executive Vice President of Customer Operations 
Charter Communications, Inc. 

Hearing on Customer Service and Billing Practices in the Cable and Satellite Television 

Industry 

Permanent Subcommittee on Investigations 
Committee on Homeland Security and Governmental Affairs 
United States Senate 

June 23, 2016 


I. Introduction 

My name is Kathleen Mayo and I have served as Charter's Executive Vice President of Customer 
Operations since September 2012. I joined the company after 15 years at Cablevision, where I 
was the Executive Vice President of Consumer Operations. 

I was part of the new management team that came to Charter in 2012 and grew Charter from 
its bankruptcy into America's fastest growing TV, Internet and Voice company. 

i appreciate the opportunity to testify today about the remarkable progress we've made at 
Charter since the company's 2009 bankruptcy, and more specifically, since our change of 
leadership in 2012. As Executive Vice President of Customer Operations, I am directly 
responsible for improving Charter's customer care, billing, sales and retention. 

Since the beginning of 2012, we have invested significantly to improve the customer experience 
and create better products, including the following: 

• We have invested approximately $7 billion dollars in our two-way high capacity 
network, including taking that network all-digital. This has allowed us to offer a 
minimum broadband speed of 60 Mbps; provide a superior video service, including 
more than 200 HD channels and thousands of On Demand titles; and make it easier for 
our customer service representatives to resolve issues remotely using the two-way 
digital set-top boxes provided to our customers. 

• As part of our effort to improve the customer experience, we insourced thousands of 
American jobs that had previously been located overseas. These jobs are located in our 
call center and field technician operations, which were once filled by third-party 
contractors. 


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• As part of our transaction with Bright House and Time Warner Cable, we now operate 
call centers from 80 locations across our footprint, consisting of more than 22,000 
employees who provide sales, repair, retention and billing support. 

• And we expect to hire 20,000 Americans as we continue to insource our service 
operations and grow customer relationships. 

The result of these changes has been a significant improvement in our customer care 
operation— ultimately resulting in a 12 percent increase in customer satisfaction across 
historical Charter markets since 2011. 

As Charter's senior executive responsible for customer care and satisfaction, I lead initiatives 
that have resulted in creating thousands of American jobs, training employees to be responsive 
to the needs of our customers and constantly identifying ways to improve customer 
satisfaction. 

I am proud of all that we have accomplished to date and I believe that the results are beginning 
to show. But anyone who knows me (or works for me) will confirm that I will never be satisfied 
with our customer call center operation, regardless of how good we get. We can and must 
always strive to do better. 


II. Charter Background and Philosophy 

In 2009, Charter filed for bankruptcy. The result of Charter's situation was an infrastructure in 
serious need of capital investment— the company had been unable to invest in its infrastructure 
to the extent we have lately, and its product suffered greatly. 

The company's financial situation meant that Charter was unable to invest in repairs, which 
kept the product from performing as reliably, while at the same time, it tried to cut cost by 
outsourcing thousands of customer service jobs overseas. 

After Charter completed its restructuring, Tom Rutledge was named CEO in 2012, and brought a 
new philosophy of growth and operation to Charter. Under this new leadership, we set out to 
institute a new playbook for success that included a core strategy of delivering superior 
broadband and video services at highly competitive prices combined with outstanding 
customer service. That goal includes growing the business by bringing more customers into the 
fold and keeping them by delivering value-priced products and ever improving service. 

Under this new leadership. Charter's first priority was to recommit to and upgrade our entire 
product line, including voice and video, and to go all-digital as quickly as possible. When new 
leadership took over at Charter in 2012, its video offerings consisted primarily of analog 
channels, only 50 HD channels and our flagship data speed was 15 Mbps. Accordingly, we 
began an effort to upgrade all of Charter's networks to digital, thereby freeing up capacity to 
increase broadband speeds significantly and offer innovative video service. Today, all video 


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products are digital and Charter's minimum broadband speed is 60 Mbps, and up to 10 gigabits 
per second for businesses, schools and libraries. 

To achieve this upgrade. Charter had to walk every mile of infrastructure and identify every 
instance of deferred maintenance from the company" s earlier bankruptcy and make those 
changes. We also came to realize the company needed to implement new and better customer 
service policies— including insourcing the customer service jobs that had previously been sent 
overseas— as well as tools and training to enable our employees to be more effective. 

The move to all-digital required Charter to provide two way digital boxes to all of its customers. 
This upgrade ensured Charter's products operated effectively, provided Video On Demand to 
every customer TV set, and also enabled the company to improve its customer service by 
communicating and troubleshooting with boxes remotely. 

We have made positive changes for our customers, but we recognize that it is going to be a long 
process to change perceptions around our company because of what took place before new 
management took over. 

Tom Rutledge has said the best way for us to change perception is to change reality by offering 
a good product, where service is a key component of that product. That is the fundamental 
directive for how we operate at Charter. It bears out in our policies, and we believe over time it 
will bear out in customer satisfaction. 

As the Executive responsible for customer care at Charter, I've been centrally involved in those 
efforts. Because we care deeply about ensuring our customers are satisfied with Charter, we 
employ a highly regarded third-party research firm, Leichtman Research Group, to track 
sentiment among our customers. 

Today, more than 57 percent of Charter's customers tell us they are very satisfied with their 
service, 37 percent are neutral. So a total of 94 percent of customers are very satisfied or 
neutral. Only six percent of our customers tell us they are dissatisfied with the service they 
receive. 

In fact, we believe the greatest sign of our customer satisfaction is to look at the new customer 
relationships we are creating. In these very competitive times, when online video is exploding 
and we have no early termination fees to prevent customers from leaving, we added more than 
1 million customer relationships from the beginning of 2012 through the end of 2015, growing 
our total customer base by 18 percent. 

We know we must continue pushing to ensure as many of our customers as possible are very 
satisfied with our service, but we are also proud of how far we've come in just four years and 
are confident in the path we are on. 


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III. Customer Service Commitment 

A, Insourced Customer Care 

As part of our transaction with Time Warner Cable, Charter expects to hire 20,000 American 
workers, many of whom will fill customer service jobs that are currently outsourced to call 
centers located in other countries. 

That number is consistent with the 7,000 employees Charter has hired since 2012— a 40 
percent increase— and the majority of those roles are customer-facing positions that were 
brought back from overseas. We are committed to locating our facilities in the communities we 
serve, most recently, opening a $16 million state-of-the art customer operations center in St. 
Ann, Missouri. 

As we train and manage our own employees, we are creating a skilled labor force that is 
executing higher quality service transactions with our customers when we sell and provision, 
install, answer billing questions, or handle repairs. At Charter we focus on craftsmanship as a 
means to improving every aspect of our business. 

Today, nearly 90 percent of our customer calls are handled onshore and in house, and 95 
percent of our in-home service visits are performed by Charter employees, rather than third- 
party contractors. 

By bringing those jobs in house. Charter is better able to manage and train the people who 
work directly with our customers. This ensures better quality control in these transactions, but 
more importantly, in how we train these employees to reflect Charter's philosophy toward our 
customers. 


B. Emphasis on training 

One way we see ourselves differently than some of our competitors is that we view our 
employees as problem-solvers, not product-pushers. Our customer service representatives 
don't have set scripts with canned language. They see each customer as an individual with a 
unique problem to fix, and we think this comes through during customer experiences. 

Some of our competitors who outsource these positions to a third party contractor lose this 
kind of quality assurance or control over how their service representatives interact with 
customers. We're also proud that this philosophy ensures we're contributing to a larger, well- 
trained American workforce, because it reflects outvalues as a company. 

In addition to the work we've done to strengthen our in-house workforce, we have also seen 
that our efforts to streamline our billing, enhance self-service and increase communication with 
our customers, as well as the approximately $7 billion in investments in our networks and 


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products, have led to significant decreases in monthly billing, service calls and trouble calls 
since 2012. 


C. Streamlined billing 

To decrease customer confusion, we also streamlined our packaging and pricing. Our National 
Packaging and Pricing plan simplified our product offerings and ensures all of our customers, 
regardless of where they live, have access to the same superior products at competitive prices. 
This pricing and packaging provides great value and has made it easier for us to communicate 
with customers about the services they signed up for. 

We are always working to elevate the customer experience. We don't charge for modems or 
customer equipment for voice service. To eliminate accidental overcharges for equipment. 
Charter instituted checks and balances that create controls in our order entry system to ensure 
we get each order right. To ensure the integrity of that system, we also built back-end 
processes that allow us to identify and correct any discrepancies on a nightly basis, meaning we 
reconcile every piece of equipment with every single charge incur system every 24 hours. 

Our audit into over-charges over the past 9 months determined the existing systems were more 
than 99 percent accurate. Out of 11 million boxes, we've found approximately 63,000 boxes, 
less than 1 percent, where customers were overbilled. We were pleased that our accuracy rate 
was as high as it was, but I will never be satisfied until we have zero instances of over-billing. 

For the affected customers we identified over the course of this review, we will explain in their 
next bill that they were overcharged and will be issued a 12-month credit for those equipment 
fees. During the course of this process, we also discovered approximately 9,000 boxes for 
which customers were not billed, though they should have been. We will correct and explain 
the discrepancy moving forward but will not seek to collect those fees that should have been 
charged. 

To permanently eliminate these billing discrepancies moving forward, we have instituted 
controls to catch any box/customer mismatch on a daily basis. Today, those charges are 
reconciled no more than 24 hours after they occur and enable us to ensure this issue does not 
occur again. 

In May of 2016, Charter completed its acquisition of Time Warner Cable. At just a little more 
than 30 days post closing. Charter has been advised that TWC currently catches and corrects 
any overcharges on a monthly basis. We will put controls into place to catch such instances 
daily, as we now have installed at Charter, but that will take approximately 60-90 days. Until 
then, we will proactively issue a 1-month credit to any customer that the current monthly 
process reveals was overcharged. 


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D. Improved customer satisfaction 

Since 2013, as we've instituted all these practices, total care calls per customer has declined 25 
percent from 2013 to 2015. Trouble calls per customer has declined 20 percent during that 
same period. Further, when our customers do need assistance, we've been able to resolve their 
issue on the first call 80 percent of the time. 

Those higher quality customer interactions are reducing service transactions, reducing churn, 
and creating longer customer relationships, supporting greater customer growth and reducing 
our operating costs. Importantly, since 2011, Charter has seen a 12 percent increase in overall 
satisfaction. 


IV. Consumer Practices 

At Charter, we're proud to be a different kind of cable company. We've not only made our 
products better and faster, we've also made them a better value. Rather than trying to squeeze 
as much profit from our customers as we can, we remain focused on growing our business by 
increasing the number of customers we serve and extending the lifetime of our customer 
relationships. 

An important part of that is changing how we actually bill our customers. To improve the 
customer experience and focus instead on our products, we don't charge common industry fees 
like additional modem fees, sports surcharges, separate USF fees, or early termination charges. 

Over the past four years, we have focused on simplifying our products, pricing and services to 
make them accessible to all consumers so we can reach them wherever they access content at 
very competitive prices. 

In fact. Charter's new low-cost broadband offering will deliver the highest speeds of any 
comparable offering to low-income families as well as be the first to offer fast broadband to 
low-income seniors. Charter's offering is the only low-cost Internet service for low-income 
populations that meets— and even exceeds— the FCC's definition of high-speed broadband. 
Charter will set a new industry standard for high-speed low-cost broadband service by offering 
30/4 Mbps for $14.99 to eligible low-income families and seniors. 

To ensure our customers receive a product that meets their expectations in terms of value, we 
have invested billions of dollars to ensure our customers have access to the most innovative 
products available today. 60 Mbps is the slowest broadband tier we sell, except in St. Louis, 
where it's even higher, at 100 Mbps. 

Our team has built a first-of-its-kind cloud-based video guide, which enables intuitive search 
and discovery across TV, online video and apps designed to work on new and old cable boxes. 
We've also developed a TV app which allows customers to watch over 170 channels on their 


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tablet or smartphone in the home, program their DVR, and even stream or download shows 
and movies to watch their favorite content whenever and wherever they want. 

Finally, as the competitive landscape has been changing, we believe it's been important to 
change with it. We see customers increasingly utilizing Internet Video. Unlike many of our 
competitors, we don't have data caps or usage based billing because we want our customers to 
be able to view as much content they want to stream or download without worry about 
charges on the fastest network. Our commitment to an open internet has earned the support 
of many internet players, most notably Netflix. 


V. Conclusion - Road ahead for Charter post-transaction 

Charter has already invested approximately $7 billion in the latest technology and 
infrastructure, created thousands of American jobs, fostered a culture of innovation, and 
committed to an open Internet. As we move forward with the combination of our company 
with Time Warner Cable and Bright House, we are excited about the prospect of rolling these 
customer-friendly policies out to our entire customer base within the new footprint. 

We recognize that for many years, the cable industry has struggled to show our customers that 
we are interested in their satisfaction, but since 2012, Charter has been working every day to 
deliver to our customers the best possible products at a competitive price. 

Simply put, we aren't satisfied unless our customers are. We are proud of the progress we have 
made, but our work... MY WORK is not done. We will continue to work to improve and show our 
customers, across the entire Charter footprint, that we are committed to providing the best 
possible experience. 


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STATEMENT OF RASESH PATEL 
SENIOR VICE PRESIDENT, PRODUCT MANAGEMENT 
AT&T ENTERTAINMENT GROUP 
BEFORE THE 

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS OF THE 
SENATE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENT AFFAIRS 

HEARING ON 

CUSTOMER SERVICE AND BILLING PRACTICES 
IN THE CABLE AND SATELLITE INDUSTRY 
JUNE 23, 2016 

Good morning. Chairman Portman, Ranking Member McCaskill, and Members of the 
Subcommittee. My name is Rasesh Patel and I appreciate this opportunity to speak with you, on 
behalf of AT&T and DIRECTV, about our commitment to customer service. The hallmark of 
our brand has been to offer customers the very best entertainment experience through our 
cutting-edge technology, unique content offerings, and superior customer service. And, our 
commitment to serving customers and giving them more value and choices has never been 
stronger. According to data from the American Customer Satisfaction Index (ACSl), DIRECTV 
has ranked higher in customer satisfaction than the top 10 cable TV companies for 16 years in a 
row. In a highly competitive market with ever-rising programming costs, we believe customer 
service is an essential component of our success, and we have accordingly devoted and continue 
to devote significant re.sources towards our goal of delivering a superior customer experience. 

Tve been with AT&T and DIRECTV for 1 5 years in a number of different roles. 

Currently I am Senior Vice President of Product Management for the AT&T Entertainment 
Group, which is the group that provides consumers with our video, mobility and Internet 
offerings. I have responsibility for product strategy, product roadmap and product development 
for AT&T/DIRECTV entertainment products. From 2012 until AT&T’s 2015 acquisition of 
DIRECTV, I was Senior Vice President of Customer Experience. 


1 



68 


In that role, I led DIRECTV’s proactive, enterprise-wide and customer-centric effort to 
prioritize and improve the customer experience across all customer touch points. The initiative 
began with a comprehensive evaluation of our policies and practices, detailed research, and an 
analysis of operational data to prioritize our efforts. This was a top priority for the company, 
CEO, and senior leadership, DIRECTV invested hundreds of millions of dollars in that customer 
initiative, which generated real improvements for our customers, including; 

• a redesigned billing statement, created with customer input and based on customer needs, 

• simpler offers at the point of sale, 

• a simplified onboarding process for new customers, and 

• the creation of a customer-friendly equipment upgrade program. 

The initiative also produced real results in terms of DIRECTV’s relationship with customers, 
including; improved customer satisfaction; fewer phone calls to our call centers each year; 
improved troubleshooting and service reliability; and increased engagement by our frontline 
employees who service our customers. That experience proves something AT&T/DIRECTV 
strongly believes in; good customer service is good business. 

Today, AT&T and DIRECTV’s customer satisfaction ratings remain at or near the top of 
the industry. As noted above, for the 16'’’ year in a row, DIRECTV rated higher in customer 
satisfaction than cable, according to the 2016 American Customer Satisfaction Index (ACSI) 
survey. JD Power’s 2015 Television Provider Satisfaction Survey ranked DIRECTV’s overall 
customer satisfaction as “significantly higher’’ than average in all U.S. regions, ranking higher 
than all cable providers, whose customer satisfaction consistently ranked “significantly lower” 
than average. 

While we take pride in these rankings, we know that customer satisfaction is a never- 
ending journey. And we are excited about what the future will bring. Since the 2015 merger, 
AT&T’s and DIRECTV’s focus on customer service has only intensified; it is central to our 
strategy. This goal is reflected in at least three major initiatives we have launched since the 
merger, including the following; 


2 



69 


• We plan to spend more than $1 billion to enhance the customer experience from 2016 to 
2017 by simplifying our systems, streamlining frontline tools, and delivering customer- 
friendly digital capabilities; 

• We devote significant resources to measuring customer satisfaction and identifying what 
matters most to our customers. 

• We aim to deliver on what we call the “Power of One”: 

> One service that customers use across all their screens; 

> One website for customers to manage their accounts and services; 

> One installation (for both satellite TV and broadband service), saving customers the 
time and inconvenience of multiple installations; 

> One service agent to handle a customer’s billing and account questions on multiple 
AT&T/DIRECTV products, saving customers the trouble of dealing with multiple 
agents; and 

> One bill for customers with multiple AT&T/DIRECTV products. 

AT&T/DIRECTV is also offering a number of new and innovative products, reflecting 
this commitment to its customers to deliver a seamless, integrated entertainment experience, 
including: 

• Nationwide Offerings. Within days of the merger being finalized, AT&T/DlRECTV 
announced a combined nationwide offering of TV and wireless. 

• Unlimited Mobile Data Plan. AT&T is offering an unlimited mobile data option for its 
Mobility and DIRECTV customers. 

• Pricing. This past Spring AT&T began rolling out simplified TV, broadband and 
wireless bundled pricing. 

• New OTT Offerings'. AT&T/DIRECTV also recently announced plans to launch video 
programming options delivered over the Internet in the fourth quarter of 2016. These 
new video subscription models reflect the flexible content choices, viewing options, 
simple pricing and a simplified experience that consumers want. These offers will 


3 



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provide a broad range of choices for our customers with freedom to watch regardless of 

how and where they enjoy their entertainment. 

Let me also address five specific customer service issues that that you have indicated are 
of particular interest to the Subcommittee. In each of these areas, AT&T and DIRECTV are 
continuing to enhance the customer experience: 

First, Customer Satisfaction. As I hope my prior remarks indicate, customer 
satisfaction has been an area of intense focus for both AT&T and DIRECTV. In 2012, 
DIRECTV launched its proactive, multiyear customer experience initiative, which required 
substantial resources, both in terms of dedicated personnel and financial investment. With the 
merger of AT&T and DIRECTV, the focus on providing subscribers with the best possible 
customer experience has intensified, as I described above. As a combined entity, we continue to 
listen to our customers about what they expect from their service provider. By combining our 
complementary services, we are providing customers a higher quality experience. They will 
have a single point of contact for placing orders, answering questions and solving problems. We 
believe that the positive changes we are making as a result of the merger will drive customer 
satisfaction even higher. 

Second, Retention Practices. Keeping our customers happy is good business. 
DIRECTV’S goal has long been to retain customers and build their loyalty, in a highly 
competitive industry, by identifying and solving their issues with solutions tailored to meet their 
individual needs. The training for our retention representatives is extensive and focused on the 
importance of identifying and resolving the “root cause” of the customer’s problem. We are 
proud that we are able to resolve the issues raised by more than 70% of the cu.stomers who call 
intending to disconnect service. Our representatives are trained to respect all customers and to 
exercise the flexibility needed to identify the service or offer best suited to each customer’s 
unique needs. We place specific emphasis on “getting it right the first time.” 

Third, Prices and Fees. DIRECTV is committed to providing our customers with 
simple and easy to understand communications with respect to services and fees. In 2014, as 
part of the Customer Experience initiative, DIRECTV introduced a new simplified bill that 


4 



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identifies current fees and charges, changes from the previous month, and the number of months 
remaining on any promotional discounted rates. This change was a proactive, multi-year, multi- 
million dollar effort that involved significant resources across DIRECTV. We also work hard to 
ensure that prices and fees are fully disclo.sed at multiple points: in our advertisements, in phone 
conversations with our agents; on our website; in the confirmation notice that is sent to every 
new subscriber; in the Customer Agreement and the Equipment Lease agreement that the 
customer signs; and, as noted, in the customer’s bill. 

Our prices reflect a highly competitive and dynamic environment. Our customers have 
many choices on how they obtain their video content, not only from the companies appearing at 
this hearing, but from a multitude of others. Programmers can make their video content 
available directly to customers, or can provide content through services like Netflix, Hulu or 
Amazon. Social media and other emerging sites generate short-form and independent 
programing. These competitive trends are sure to continue. And, if we do not meet our 
customers’ expectations, they will vote with their wallet. 

It is also no secret that the pay TV industry is under intense pressures from rising 
programming costs. According to some analysts, programming costs are increasing at about 8 to 
10 percent annually over the past four years, while pay TV bills are increasing by an average of 3 
to 4 percent. ' 

Fourth, Customer Complaints. AT&T/DIRECTV appreciates the importance of both 
effectively resolving customer complaints, and eliminating their causes. We have considerable 
re.sources focused on addressing, tracking, and analyzing customer complaints at various levels, 
including those handled by our customer service agents, supervisors, or our escalation teams. 
Robust processes enable us to assess customer complaints, identify and prioritize the most 
important issues raised by our customers, and work with management to eliminate root causes. 

Fifth, Credit and Refund Policies. DIRECTV maintains a team dedicated to identifying 
and addressing billing errors. When analysts identify' that customers have been incorrectly 
overcharged, DIRECTV works to proactively reimburse affected customers in full and notifies 

^ http://www.multichannel.com/news/distribution/cable-rates-rise-3-4-averaKe-2Q16/396619 


5 



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those customers through their bill or by letter. This team has also used FEMA data to identify 
customers living in areas affected by disasters and, in those areas, has proactively suspended 
non-payment cutoff timelines and late fees. 

In closing, let me reiterate that the combined AT&T/DIRECTV fully understands and 
appreciates the importance of ensuring that customers receive the best possible customer service. 
We have spent substantial time and resources in the past to improve all aspects of the services we 
provide our customers, and we are committed to continuing to do so in the future. We are 
confident that the combined AT&T/DIRECTV will only further enhance our ability to provide 
our customers with the very best in the products and services they desire. Delivering an 
effortless customer experience is at the center of everything we do. 

Thank you for the opportunity to appear here this morning, and I look forward to your 
questions. 


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dish 

Testimony of 

Kathleen Schneider 
Senior Vice President of Operations 
DISH Network LX.C. 

on 

“Customer Service and Billing Practices in the Cable and Satellite Television Industry” 

before the 

United States Senate Permanent Subcommittee on Investigations 


June 23, 2016 



74 


1. Introduction 

My name is Kathy Schneider, and 1 am the Senior Vice President of Operations for DISH 
Network L.L.C. (DISH). 1 work out of the company’s headquarters in Englewood, Colorado. 

On behalf of DISH, 1 would like to thank Chairman Portman, Ranking Member McCaskill, and 
members of the Subcommittee for the invitation to discuss DISH’s award-winning satellite 
television service. 

In the 1980s, DISH’s three founders decided that customers should have an affordable 
alternative to cable. DISH started with two large C-band satellite dishes delivered by the 
founders themselves in a pickup truck. One day, while hauling one of those two dishes to a 
customer in rural Colorado, a strong wind blew the dish off its trailer and into a roadside ditch. 
There went half of the company. Summed up as a bad day in the infancy of DISH, our founders 
overcame this setback to build what is now a Fortune 200 company that employs thousands and 
serves millions throughout the nation - a seemingly unlikely future on that partieularly eventful 
day. 

Since launching its Direct Broadcast Satellite (’‘DBS”) service in early 1996, DISH has 
worked to reinvent television distribution and provide meaningful competition within the pay- 
TV industry. We have introduced some of the market’s best, most innovative products while 
leading the industry in providing customers the best value. Fundamentally, our .success depends 
on satisfied customers, and we have spent the last two decades working tirelessly to make the 
customer experience better. 

Today, DISH is the nation’s fourth largest pay-TV provider with nearly 14 million 
subscribers and 18,000 employees. Throughout the U.S., we have twelve call centers, two large 
service locations and dozens of other staffed facilities. We have thousands of staff dedicated to 


1 



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serving our customers. We also have relationships with over 6,000 independent retailers 
(providing storefront options for our customers), including 146 retailers in Ohio and 167 retailers 
in Missouri. We are proud that DISH is the only provider of local broadcast television service in 
all 210 U.S. TV markets, ensuring that even the most rural customers receive the same high- 
quality television service as customers in urban areas. 

Without a doubt, DlSH’s success relies on our commitment to customer sendee. We 
work hard every hour of the day, every day of the year to provide a great entertaimnent 
experience and make our customers happy. Happy customers are created by combining the best 
technology available with transparent billing, ease of installation, and efficient, effective service. 
Our customer service scores continue to top our competitors because of our commitment to these 
goals. 

We are also committed to continued improvement. We constantly ask ourselves: what 
can we do better? We keep innovating and coming up with the best technology on the market to 
meet customer demands of TV anywhere, anytime.’ We diligently track issues that impact our 
customers’ experience. We address these customer “pain points” by adjusting our policies, 
procedures and training materials and retooling our subscriber offerings. We also hire top talent 


’ Third parties have consistently recognized DISH for its industry-leading technology. This year, 
DISH was awarded Best of the Consumer Electronics Show (“CES”), the annual conference put 
on by the Consumer Technology Association (formerly known as tlie Consumer Electronics 
Association). DISH also received CES Editors’ Choice for its Hopper 3, the third generation of 
DlSH’s Hopper digital video recorder (“DVR”). The Hopper is the only set-top-box on the 
market that, among other things, uses advanced built-in technology so customers can view all of 
their live programming and DVR content from anywhere over the Internet. In 2015, DISH 
launched Sling TV, becoming the first to market with a live TV Internet streaming product (an 
over-the-top “OTT” service). For just $20 per month, consumers can watch the best of live TV, 
including ESPN, as well as other core video programming like CNN, AMC, HGTV and TNT. 
There is no installation appointment for customer to deal with, and customers can cancel the 
service at any time without penalty. 


2 



76 


to ensure that our agents represent DiSH’s values and have the tools necessary to match each 
customer with the best programming, teehnology and value for his or her needs. 

As the person responsible for overseeing customer service for DISH, I live and breathe 
these complex issues each day while managing DISH’s call centers and business process 
improvement operations. I am proud of all that my fellow DISH employees have done over the 
years to make our customer service best in class, but we are not content to rest on our 
accomplishments. We are not perfect and make mistakes; but we do our best to fix and learn 
from those mistakes. And despite our best efforts to train all of our customer service agents, 
there are times when an agent fails to provide a good customer experience. In those cases, we 
address that particular employee and train others to not make the same error. How we provide 
customer service is an ever-evolving process, and we welcome feedback from the Subcommittee 
on ways that the overall service experience can be made better for our subscribers. 

II. DISH Strives to Make Its Customers Happy and Keep Them Happy 

A. Without Happy Customers, DISH Loses Money 

DISH spends around $800 dollars to acquire a single subscriber. If a subscriber leaves 
within a span of four years, DISH loses money. To recoup our up-front subscriber acquisition 
costs, we endeavor to keep our customers from “churning," an industry term that describes when 
a customer leaves a pay-TV serv'ice. The key to preventing chum is offering a better product 
with better service than our competitors, and the competition is tough. There is at least one other 
cable, telco, or satellite TV provider everywhere DISH offers service. And most of the time, 
DISH actually faces two or three competitors, one or more of which is a cable or telco company 
that can offer the compelling trifecta of TV, Internet, and phone service — the “triple-play” 
package. As a satellite television provider that does not widely or directly offer wired broadband 


3 



77 


or phone products, DISH principally competes not on the mix of services we can provide, but on 
the quality and pricing of our pay-TV packages. As a result, DISH has built its business on 
offering the most innovative pay-TV experience with industry-leading customer service, at an 
affordable price. 

B. DISH Meets and Exceeds Our Customers’ Expectations Through 
Continuous Monitoring and Improvement 

What makes a happy customer? In my experience, customers are happy when they: 

• Understand and see the value of the products and services they are getting; 

• Understand their bill; 

• Receive timely and seamless installation of reliable products; and 

• Receive responsive and speedy repairs and service upgrades. 

Our sales, installation, customer service, billing, product development and programming teams 
are constantly working together to make sure that DISH satisfies all of these expectations. We 
do this by focusing on those points in the customer life cycle that are most likely to disrupt, 
disappoint or confuse a customer. These “events” are: I) account initiation; 2) installation; 3) 
price changes; 4) service calls and repairs; and 5) changes to programming, including 
broadcaster-imposed blackouts of key content. 

DISH has created two extensive interfaces that walk our agents tlirough customer service 
issues, step-by-step. One interface handles technology issues, and the other interface handles 
just about everything else. We also operate a “community portal” from which agents can access 
the latest training materials and customer service tips, including analysis of recent customer pain 
points and how to address them. These tools attempt to cover every issue a customer could think 
of to bring up with an agent, and they empower our agents to clearly and concisely give 
customers a resolution to the problem at hand. When a call comes in, DlSH’s customer service 


4 



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policy is to “resolve, prevent, promote” — in that order. This motto of our customer service is 
displayed prominently all over our call centers. Our agents’ first priority is find a solution to the 
customer’s issue, whatever it might be. Again, only by keeping customers happy can we keep 
customers with us and ultimately succeed as a business. 

We also work hard to prevent issues before they happen. At the time of sale, we focus on 
trying to ensure that the customer understands the products and services they are receiving and 
all of the associated costs. After installation, to make pricing and billing easy to understand and 
readily accessible, our bills are clear and concise, and customers can access their account 
infonnation via phone, text, paper bills, and the DISH website. We pride ourselves on 
transparency. While network and sports programming content both account for a 
disproportionately large share of our costs, we do not itemize “local channels” or 
“retransmission” fees on our bills, and no “regional sport network” (“RSN”) fees appear. 

C. DISH’S Commitment to Customer Scr\'ice Is Well-Recognized 

DISH’S internal metrics show that calls to us are promptly answered and our agents 
consistently resolve our customers’ issues quickly and efficienUy. For example, in May 2016, 
approximately 89 percent of customers calling DISH got an agent on the line within 60 seconds 
of the call coming through, and the vast majority of these customers had their needs met on that 
initial call. By handling customer issues on the first call and minimizing callbacks, DISH serves 
both its customers and its shareholders, since fewer calls mean fewer resources and expenses 
devoted to fielding them. 

DISH oul-perfonns its competitors in customer service, and in doing so, we provide a 
high-quality pay-TV alternative to consumers nationwide. Highly regarded third-party customer 
service survey firms have recognized DISH’s achievements. DISH has an A+ rating from the 


5 



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Better Business Bureau and, for four years running, we’ve won a J.D. Power award for customer 
satisfaction. DISH also is ranked number one in several categories by the American Customer 
Satisfaction Index: Highest Call Center Satisfaction; Highest Website Satisfaction; Clearest Bill 


to Understand; and Lowest Customers Complaint Rate. 


Comparison of Customer Service Practices of Largest Pav-TV Providers ^ 



DISH 

Comcast 

Charter 

DirecTV | 

Call center satisfaction ranking 2010-2015 

#1 


, ' w .'aaHiMBii 

Clearest bill to understand ranking 2010-2015 

ttl 


. Si .--ilMBl 

Website satisfaction ranking 2010-2015 

#1 


ay . -■'.-I— uflMi 

Lowest customer complaint rate 
ranking 2010-2015 

#1 




^ Based on the average American Customer Satisfaction Index companson of major TV providers (2010-2015) 


Comparison of Basic Packages Among Lareest Pav-TV Providers ^ 



j DISH 

Comcast" 

TWC" 



DirecTV^ | 

Package name 

AT120+ 




.lect 

'ChbioeLo,, 

Channel count 

190+ 






Advertised price/month 

$49,99 


ii'-.' 



$60.00'-:,- 

Additional fee for local channels^ 

$0 




/$g:6Sv' • 



$0 






Additional fee for HD programming 

$0 




$0,00 


Contract period 

2 Years 



..^S! 

a 'contract"'. 

2 years '-v' 

Price protection 

2 Years 


» r V 

L."H 

YKat 

.!. year 

Package price increase at end of first year 

so 



M 




Yes 



B 

. N'b ■ 

Yes '' , 

Record up to 16 shows at once 

Yes 




''4 ■ ■ 

No 

Hours of HD recording storage 

500 




: 

200 , ' ■.$: 

Watch 100% of your live TV channels anywhere 

Yes 



Ml 

II. No-' '■ 

No ' 

Watch 100% of your DVR recordings anywhere 

Yes 




Ho ■ . 

No ■ 

Opt-in to record primetime content from ABC, 
CBS, NBC & FOX and skip commercials while 
watching those recordings 



wr 

•tPB 

■ t 


No 

Built-in Netflix app 

Yes 



' m 


No 

Wireless receivers 

Yes 



ii 


YsLOOL 

Bluetooth audio 

Yes 





Vesv-oL 

Remote locator 

Yes 


1. . . m 


2 'Mb' TOO : 

Available nationwide 

Yes 


C s. 


■ ■■ 

Yes': " , 


^All information based on stand-alone video service, not bundled products 

^Data found on 6/20/16 for Comcast Denver 

^Data found on 6/20/16 for TWC New York City 

^Data found on 6/20/16 for Charter New Orleans 

^Data found an 6/20/16 for DirecTV national offer 

^Maximum fee, amount varies by geographic location 


6 
























80 


III. Programming Costs and Other External Forces SubstantiaUy Affect the Experience 

of DISH Customers 

One of the main areas of inquiry by the Subcommittee has involved customer “pain 
points.” In overseeing all of customer service for DISH and having listened to thousands of 
customer calls, I can say this: the issues that have most consistently come up over the last several 
years involve the price of programming, and the lack of options that customers have in selecting 
which channels they receive. No matter how many call center representatives we have or how 
much training we provide those representatives, DISH cannot address this core complaint on its 
own. 

This is because the number one source of rising pay-TV rates is the dramatically 
increasing cost of acquiring programming content. DISH, like every other pay-TV provider, 
must ultimately ask its customers to shoulder at least some of the costs that have resulted from 
the sky-rocketing price demands from our programming partners. 

Even so, DISH still leads its competitors in providing high-quality programming for the 
lowest everyday prices. DISH offers various introductory pricing packages, which allow 
customers to receive discounted service, free premiums, or other benefits for a period of time 
after joining DISH. Even though this is an effective tool to attract customers, and DISH is best- 
in-class in providing notifications on the termination of a discount period, customers often have 
questions or concerns when the promotion ends. For this reason, we now offer a two-year-price- 
lock option that gives customers a prolonged discount in exchange for their commitment to 
DISH. Yet, despite our efforts to curb the overall costs of our service, there are two key 
practices abused by programmers that keep driving price increases: (i) demands for exorbitant 
retransmission consent fees and (ii) an insistence on channel bundling. 


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A. Rising Retransmission Consent Fees 

Regarding the first lactic, DISH must negotiate with local broadcast stations lo retransmit 
their signals to consumers, even though these s^e consumers are supposed to be able to receive 
the broadcast signal for free over-lhe-air. The fee for this right is called the “retransmission 
consenC fee. When the retransmission consent system was first implemented by Congress as 
part of the 1992 Cable Act, satellite TV was not yet a competitive choice for consumers, and 
cable operators had monopolies on pay-TV programming. It was mutually assured destruction 
for a broadcaster and a cable provider not to reach an agreement on carriage rights. The cable 
company needed the programmer’s content to have a compelling service to offer consumers; the 
broadcaster needed the cable company, as the one distributor in town, to reach the largest 
audience possible. 

In the years since the 1992 Cable Act, the laws governing retransmission consent remain 
largely unchanged, but the market itself is decidedly different. There are now two satellite 
companies offering service in every domestic TV market and competing with the incumbent 
cable providers. In many of the country’s largest markets, there are also traditional telephone 
companies, like Verizon, AT&T, and CenturyLink, that offer competition to both satellite and 
cable providers. Additionally, emerging internet streaming services (“over-lhe-top” services like 
Netflix, Amazon Prime, Hulu, etc.) are becoming more and more popular. In contrast, the local 
broadcast stations still enjoy a government-sanctioned monopoly within each Designated Market 
Area (“DMA”). For example, there is only one ABC in Denver; one NBC in Cleveland; and one 
CBS in St. Louis. 

Broadcasters have taken advantage of these changes in the video services marketplace to 
play video distribution companies against one another and demand exorbitant increases in 


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retransmission consent fees. We are often seeing fee demands increasing by several hundred 
percent every 3-year retransmission consent cycle. Between 2005 and 2015, retransmission 
consent fees climbed an astounding 22,400 percent. If the price of other consumer goods rose 
that fast, consumers would be priced out of almost everything — a dozen eggs would be nearly 
S3 50, a large coffee would be over S400, and a gallon of milk would be over S700. SNL Kagan, 
one of the most respected firms providing analysis of the TV industry, estimates that 
retransmission consent fees will reach $10.3 billion by 2021, up from just over $1 billion in 
2010.^ And all of these fees are for TV that is supposed to be “free” to consumers over-the-air. 

The broadcasters’ disproportionate leverage is proven by the rising number of 
programming “blackouts” in which programmers take down their signal on the cable or satellite 
provider’s network. In 2010, there were only 12 such blackouts. Just five years later, in 2015, 
there were more than 180 of these blackouts. This translated into 12 million households — 1 in 8 
pay TV subscribers — that were affected by a TV blackout in 2015. These statistics do not even 
include all of the near-misses, which are almost equally disruptive to our business since, as a 
contract expiration approaches, the networks increasingly engage in the practice of “crawling” 
misleading notices at the bottom of their channel feeds. These “crawl messages” intimate that 
the distributor (not the broadcaster) is about to discontinue carriage and customers are 
encouraged to call the distributor (not the broadcaster) to complain. 

Blackouts inflict real injury on distributors, while barely leaving a mark on the 
broadcasters. Of course, broadcasters know this. Calls to DISH service centers can double or 


‘ See Joe Flint, Retransmission Consent Fees to Hit $3.6 Billion in 201 7, LA Times (May 25, 

201 1), http://latimesblogs.latimes.eom/entertairunentnewsbuzz/20U/05/retransmission-consent- 
fees-to-hit-36-billion-in-2017.html. 


9 



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even triple leading up to and during a blackout, causing major disruption to our call centers and 
regular customer service operations. And all of this happens because of a broadcaster-driven 
“call to action” that is entirely based upon a false premise: DISH does not “take down” 
programming. Rather, it is the broadcaster that withholds its consent for carriage, despite the 
fact that DISH and other distributors offer to compensate the programmer for interim carriage at 
whatever rates are ultimately agreed upon. 

In short, broadcasters are 100% responsible for blackouts, and they unfortunately use 
consumers as pawns in their negotiations with pay-TV companies. Worsening the harm to 
consumers, broadcasters often time their expiration of retransmission consent agreements to 
coincide with marquee programming events, such as the Super Bowl, NBA Finals, Oscars, etc. 
At those times, of course, programmers have the most leverage to threaten consumer disruption. 
If the broadcaster does not consent to carriage, DISH cannot legally provide that programming to 
its customers. 

Ultimately, the real victims in these one-sided retransmission consent contests are the 
consumers who have had their programming pulled by the broadcasters. Even when deals are 
reached, retransmission consent fees are often several times what they were in the prior cycle. 
This drives up the cost of providing TV service and, therefore, drives up customers’ bills. 

B. Channel Bundling 

Bundling demands by programmers are also causing higher prices for consumers. 
“Bundling” in this context means programmers requiring a pay-TV provider to purchase, and 
sell, groups of channels together, often including marquee programming together with less- 
popular or niche channels. This is done whether or not a consumer actually wants everything in 
that bundle. So, DISH has a choice: decline purchasing the bundles and fail to offer the 


10 



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programming that most customers desire, or purchase unwanted cable channels from a 
programmer in order to access that programmer’s major network content and/or other highly- 
rated channels. DISH often must choose the latter to offer a competitive programming lineup to 
our customers, and it costs us. In conjunction with programmers’ common corollary demand 
that their programming be carried on DlSH’s most popular programming package, bundling 
causes consumers to pay for programming that they simply do not want. Sports programming, in 
particular, drives costs in this way. While sports are “must have” programming for some 
customers, other customers neither watch sports nor w'ant to pay for them. 

The practices detailed above collectively prevent DISH from creating the type of tailored 
packages that best meet our customers’ needs and budgets and, in general, cause an enormous 
amount of customer pain. We have called on Congress and the FCC to update the broken 
retransmission consent system to, among other things, stop blackouts, and address the anti- 
consumer effect of forced bundling. These reforms would go a long way in moderating prices 
for consumers and perhaps even lowering them. 

V. Conclusion 

DISH relentlessly pursues the best customer service practices possible to stay competitive 
in today’s pay-TV market. Customer satisfaction directly drives the success of our business, and 
we are always working to improve our systems and processes to provide a better overall 
experience to our customers. On behalf of DlSH’s 18,000 employees and millions of subscribers 
across the nation, I thank the Subcommittee for this opportunity to discuss DlSH’s customer 
service program and the actions we take daily to deliver the best value to our subscribers. 


n 



85 


United States Senate 

PERMANENT SUBCOMMITTEE ON 
INVESTIGATIONS 


Committee on Homeland Security and Governmental Affairs 

Rob Portman, Chairman 

Claire McCaskill, Ranking Member 


SOME CABLE AND SATELLITE 
COMPANIES DO NOT REFUND 
CUSTOMER OVERCHARGES 

STAFF REPORT 

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS 
UNITED STATES SENATE 





86 


SENATOR ROB PORTMAN 
Chairman 

SENATOR CLAIRE MCCASKILL 
Ranking Member 

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS 

BRIAN CALLANAN 

Staff Director & General Counsel 

MATT OWEN 
Chief Counsel 

PHILIP ALITO 
RACHAEL TUCKER 
Counsels 

MARGARET DAUM 

Staff Director & Chief Counsel to the Minority 

JACKSON EATON 
Counsel 

CRYSTAL HUGGINS 
GAO Detailee 

KELSEY STROUD 
Chief Clerk 

ADAM HENDERSON 
Professional Staff Member 


i 



87 


SOME CABLE AND SATELLITE COMPANIES DO NOT 
REFUND CUSTOMER OVERCHARGES 

TABLE OF CONTENTS 

EXECUTIVE SUMMARY 1 

DISCUSSION 2 

I. Time Warner Cable and Charter Do Not Automatically Refund or 

Credit Overcharged Customers 3 

A. Time Warner Cable’s Policies and Practices 3 

B. Charter’s Policies and Practices 7 

II. By Contrast, Comcast, DirecTV, and Dish Automatically Grant 

Credits or Refunds to Overcharged Customers 9 

A. Comcast’s Policies and Practices 9 

B. DirecTWs Policies and Practices 10 

C. Dish’s Policies and Practices 11 

III. Actioms Taken as a Result of the Subcommittee’s Investigation 13 


ii 



88 


EXECUTIVE SUMMARY 

As part of its investigation of cable and satellite television companies, the 
Subcommittee reviewed how five companies — Charter Communications, Comcast, 
Time Warner Cable, > DirecTV, and Dish (also known as “multichannel video 
programming distributors” or “MVPDs”) — identify and correct overcharges caused 
by company billing errors.^ 

Each MVPD has millions of subscribers and generates millions of bills 
annually. Each bill, in turn, contains a number of line items (e.g., a base television 
package, an HBO subscription, a leasing fee for a set-top box), re,sulting in hundreds 
of millions of line items a year.'^ Predictably, customer billing records do not always 
match customer equipment and service records, meaning that some customers are 
billed for items they have not ordered while other’s erroneously escape being 
charged for services or equipment they use. 

The Subcommittee reviewed how the. MVPDs investigate and remedy these 
billing errors, with particular focus on their efforts to make overcharged customers 
whole. We found that the MVPDs vary greatly with respect to how they handle 
billing overcharges. 

First, throughout the time period examined by the Subcommittee, Time 
Warner Cable and Charter made no effort to trace equipment overcharges to their 
origin unless customers specifically asked them to and did not provide notice or 
refunds to customers. 

Second, other MVPDs have invested effort and resources to prevent 
overcharges and provide refunds or credits to customers who have overpaid. 

Comcast and DirecTV provide automatic refunds or credits to overcharged 
customers, while Dish’s billing system is designed to prevent these types of 
overcharges from occurring in the first place. 


■ During the course of the investigation. Charter acquired Time Warner Cable. Because it will take 
years to integrate Time Warner Cable’s billing practices into Charter’s, we treat them as separate 
entities for purposes of this report.. 

^ In this report, we use the term “billing error ’ to refer to billing errors caused by flaws in M\TDs' 
billing systems. Similarly, the term “overcharges” refers to an overcharge caused by this type, of 
error. These do not constitute the only type of billing error or overcharge a customer may encounter. 

See Interview with Ernie Pighini, Comcast Senior Vice President and Controller (June 9, 2016) 
(hereinafter “June 9 Pighini Interview”) (noting that Comcast has approximately 287 million discrete 
“billing events” each year): see Letter from Michael Bopp, Counsel to Time Warner Cable, to 
Senators Rob Portman and Claire McCaskill, at 2 (June 10, 2016) (“.Any company that issues 
millions of bills each month (with multiple service elements on each) inevitably will encounter some 
errors....”). 


1 



89 


Third, based on data provided by Time Warner Cable and Charter, the 
Subcommittee estimated how much Time Warner Cable and Charter have 
overbilled customers nationwide. 

• Between January and April 2016, Time Warner Cable overbilled 
customers nationwide an estimated $639,948. The Subcommittee 
projects that, in 2016, Time Warner Cable will overbill customers 
nationwide a total of $1,919,844. 

• Charter has not yet completed the underlying work necessary to 
determine how much it has overhilled customers. But it has informed 
the Subcommittee that it overbilled customers by at least $442,691 per 
month. 

Fourth, the Subcommittee sought information about the number of customers 
overcharged in Ohio and Mis.souri. Time Warner Cable estimates that, in 2015, it 
overbilled 40, 193 Ohio customers a total of $430,393 and 4,232 Missouri customers 
a total of $44, 152. Time Warner Cable also told the Subcommittee that, during the 
first five months of 2016, it overbilled customers in Ohio for 11,049 pieces of 
equipment, totaling $108,221. Charter estimates that it has annually overcharged 
approximately 5,897 Missouri customers a total of $494,000 each year. Charter- 
does not provide service in Ohio, 

Fifth, as a result of this investigation, both Time Warner Cable and Charter 
have taken steps to address these issues. Each month. Time Warner Cable 
performs an audit comparing its billing records with service records. Going 
forward, the company will provide an automatic onc-month credit to anyone who is 
identified in the audit as having been overcharged. Time Warner Cable will not, 
however, investigate when it began overcharging customers unless customers bring 
specific concerns to the company’s attention, nor will it provide a full refund dating 
back to when the overcharge began. Similarly, Charter will provide customers with 
a one-year credit for any equipment overcharges. Charter has also implemented 
systemic controls that it says will prevent equipment overcharges in the future. 

DISCUSSION 

During the six and a half year time period covered by the Subcommittee’s 
investigation. Time Warner Cable and Charter did not automatically refund or 
credit customers for equipment overcharges they discovered. ‘ By contrast, Comcast 
and DirecTV provided full refunds to overcharged customers, and Dish’s 
sophisticated billing system is designed to prevent these types of issues from 
occurring in the first instance. 


^ All five MVPDs have uniform policies with respect to undercharges. Each MVPD corrects the error 
prospectively and does not attempt to bill customers retrospectively for items the MVPDs 
erroneously left off their bills. 


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90 


I. Time Warner Cable and Charter Do Not Automatically Refund or 

Credit Overcharged Customers. 

Two MXT’Ds — Time Warner Cable and Charter — have procedures for 
identifying overcharges and removing them from customers’ bills prospectively. 
Neither company, how'ever, has automatically provided full retroactive refunds or 
credits for past overcharges. Instead, Time Warner Cable and Charter have 
generally granted refunds or credits only upon customer request. 

A. Time Warner Cable’s Policies and Practices. 

To understand Time Warner Cable’s policies, the Subcommittee studied how 
the company identifies billing errors. Each month, Time Warner Cable runs an 
internal audit comparing its billing records to its equipment and programming 
records.'* Due to legacy acquisitions, Time W’arner Cable has two separate billing 
sj'stems, called ICOMS and CSG, and it performs its monthly audit on both 
systems. ^ Using data from the audit, Time Warner Cable’s Revenue Assurance 
Department (a staff of seven people) generates a list of “inconsistencies” — instances 
in which the company’s billing records do not match the company’s equipment or 
programming records." 

If the audit shows that a customer has not been billed for equipment or 
services that the customer has received, the company treats those inconsistencies as 
undercharges and adds the appropriate charge to the customer’s bill going forward.® 
Time Warner Cable does not attempt to retroactively charge the customer for 
previous months in w'hich that customer was undercharged.® 

If the audit shows that a customer has been billed for equipment or services 
that he or she does not have, the story is more complicated. In some cases, 
customers agree to pay for equipment they do not actually have so that they can 
receive a cheaper package price — for example, a consumer who wants only internet 


^ Interview with Erik Walder, Time Warner Cable. Senior Director. Accounting Policy and Revenue 
Assurance; Ray Remnarce, Time Warner Cable, Director, Billing Operations; Wendy Rasmussen, 
Time Warner Cable, Vice President, Marketing Operations; David Baran, Time Warner Cable, 
Group Vice President, Pricing and Promotion; Jeff Zimmerman, Time Warner Cable, Senior Vice 
President and Deputy General Counsel; Mike Quinn, Time Warner Cable, Group Vice President and 
Chief Counsel, Regulatory (.May 11, 2016) (hereinaRer “Time Warner Cable Refund Briefing”). Time 
Warner Cable further explained that, until 2013, its "review process occurred at a regional level” but 
that, “(ijn 2013, a.s part of an internal restructuring, the process was centralized and placed in the 
Coi-porate Controller’s organization.” Letter from Michael Bopp, Counsel to Time Warner Cable, to 
Senators Rob Portman and Claire McCa.skill, at 3 (June 10, 2016). 

“ See TWe 1 7,668 (showing billing errors for ICOMs and CSG customers). 

~ Time Warner Cable Refund Briefing. 

^ Id. 

■'Id. 


3 



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service might decide her cheapest option is a promotional package including both 
internet and cable television. By participating in the promotion, the customer 
agrees to pay a monthly rental fee for a set-top box but may instruct the company 
not to provide her with that set-top box.*® In such a case, the customer’s billing 
records will show a charge for a set-top box, but the customer’s equipment records 
will show that he or she does not physically have a set-top box.'* Nevertheless the 
charge is correct. 

To weed out such examples from the audit results, Time Warner Cable 
investigates each potential overcharge. In the example at hand, Time Warner 
Cable’s subsequent investigation will show that removing the set-top box charge 
would void the customer’s promotional offer and increase her total price — which the 
company presumes the customer does not want.*" In such cases, the company will 
conclude that the customer is being appropriately charged and will not adjust the 
customer’s bill. "* Time Warner Cable perforins this type of investigation for all 
potential overcharges. In April 2016, for example, Time W'arner Cable identified 
49,132 pieces of equipment associated with overcharges; of those 49,132 pieces of 
equipment, 37,653 (approximately 77 percent) were not “correctable” overcharges 
because they were associated with accounts participating in promotional offers.'* 
Time Warner Cable told the Subcommittee that its billing-error rate for video 
equipment is 0.07 percent."* 

Once Time Warner Cable identifies bona fide billing errors, it attempts to 
correct them prospectively. It does so using a software program that enables mass 
additions or deletions of charges from a large number of customer bills; the 
company refers to the pi'ogram as a “macro.”'® That macro, however, is prone to 
errors. In some months, such as May 2016, the program crashes, and Time Warner 
Cable is unable to correct any billing errors. *■* When that occurs, depending on how 
quickly the macro can be corrected, the company may wait until the next month to 
run the program again, And even when the program does not crash. Time Warner 


I*’CC regulations long-required cable companies to provide cable service using .set-top boxes 
equipped with CableCARDS and, even under recent regulatory reforms, cable operators have a 
limited ability to provide television service without providing and charging customers lor a set-top 
box. Time Warner Cable informed the Subcommittee that it has invested in, and has begun rolling 
out, technology that will enable it to provide television service without providing a set-top box. 

" See, e.g., TWC 17,678. 

Time Warner Cable Refund Briefing. 

1" W. 

TWC 17,668, 

"* Time Warner Cable Refunds Briefing. 

'« Id. 

‘•Id. 

'8/d. 


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92 


Cable told the Subcommittee that its aim is to correct only 80 percent of billing 
errors through the macroO^ 

Time Warner Cable does not attempt to trace billing errors to their origin and 
provide a refund or credit to overcharged customers for the total amount they have 
overpaid. -0 In,stead, Time Warner Cable provides only a partial credit for the 
month in which the error was discovered. Customers must call the company to 
request a refund or credit to make up for overcharges frotn prevaous months,-* As 
the graphic below shows, Time Warner Cable does, however, provide its customer 
service representatives with notice that customers have been overcharged and 
instructs them that the company “can offer customer credits on request.” But the 
company does not alert the customers thein.selves of the possibility (indeed, the 
likelihood) that they have been overcharged on past bills. 

TV S&rvice Adjustment - Carolinos, Midwost, Northeast 

A recent accosmt review idenliPied a billing error TV service on approsama'eiy 13.COO customer accounts in 
ICOMS markots. These customers have been overbiiled for modofn and CabieCA.RO equioment. We sviil rerros'b the 
additicna! .ten s from cuslorne's' accounts as soon as they are identified We can :?ffef customer aedils on request l 

J 

To determine the full .scope of this problem, the Subcommittee requested data 
concerning the number of overcharges and the associated dollar amount. The chart 
below .shows Time Warner Cable's nationwide losses and gains resulting from 
undercharges and overcharges between January and April 2016. It shows that 
Time Warner Cable overcharged customers $639,948 and undercharged customers 
$3,595,498. Based on the data below, the Subcommittee estimates that, for 2016. 
Time Warner Cable will overbill a total of .$1,919,844. 


» Iff 
U, 
■a Id. 




93 


Month 

Actual 

Undercharges 

Potential 

Overcharges 

Estimated 

Correctable 

Overcharges 

Jan. 2016 

$909,157 

$742,746 

$170,832 

Feb. 2016 

$959,564 

£707,036 

$162,618 

Mar, 2016 

$852,784 

$736,501 

$169,395 

Apr. 2016 

$873,993 

$596,098 

$137,103 

Total 

$3,595,498 

$2,782,381 

£639,948 


Sources; TWC 17,686, 17,687. 


The Subcommittee also requested information about overcharges to Ohio and 
Missouri customers. In response, Time Warner Cable produced data from 2015 and 
2016. Time Warner Cable estimates that, in 2015, it overbillod 40,193 Ohio 
customers for a total of $430,393.-^ It estimates that it overbilled 4,232 Missouri 
customers for a total of $44, 152.^'* As shown below', the company also provided data 
show'ing Ohio overcharges in the first five months of 2016, Those figures show that 
Time Warner Cable overbilled for 1 1,049 pieces of equipment, at a total of $108,221. 


Month 

Pieces of Equipment 

Total Overcharge 
Amount 

January 2016 

2,526 

$24,087 

February 2016 

1,998 

$19,711 

March 2016 

2,460 

$24,489 

April 2016 

2,110 

$20,757 

May 2016 

1,955 

$19,177 

Total 

11.049 

$108,221 


Source: Letter from Michael Bopp, Counsel to Time Warner Cable, to Senators Rob 
Portman and Claire .McCaskill. at 2 (June 16, 2016). 


Time Warner Cable defends its policy on the ground that it is efficient. Going 
through months of customer bills to identify overcharges would be costly and time 
consuming, the company argues. The company also claims that the customer is best 
positioned to notice an overcharge and bring it to Time Warner Cable’s attention. 

The Subcommittee’s industry-wide review, however, casts considerable doubt 
on Time Warner Cable’s belief that remedying past overcharges is infeasible. As 
described below, Comcast’s method of identifying overcharges is substantially 


Letter from Michael Bopp, Counsel to Time Warner Cable, to Senators Rob Portman and Claire 
McCaskill, at 2 (June 20, 2016). 

23 Id. 

Time Warner Cable Refun<i.s Briefing. 


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similar to Time Warner Cable’s — but unlike Time Warner Cable, Comcast takes the 
additional step of determining how long a customer has been overcharged and uses 
that information to grant automatic refunds or credits to customers. 

In short, during the time covered by the Subcommittee’s investigation, Time 
Warner Cable made no effort to trace the billing error to its origin; did not notify 
customers of identified overcharges so that customers might determine when they 
began and request a refund; and did not provide a full refund for the month in 
which the overcharge was detected. 

B. Charter’s Policies and Practices. 

The Subcommittee also discovered that Charter’s practices for identifying 
and correcting overcharges have been substandard. According to Charter, prior to 
August 2015, the company did not run any systematic audits to reconcile its bilHng 
records with equipment records. Charter’s failure to perform regular audits means 
that overcharged customers could not even receive a prospective correction of their 
bill unless they noticed the problem themselves and contacted Charter. Beginning 
in August 2016, however. Charter began taking steps to identify equipment 
overcharges currently on its system. Charter will complete that process in June 
2016.25 

Charter informed the Subcommittee that it utilizes several procedures to 
ensure that customers are properly billed, including for equipment. First, Charter 
has implemented systemic conti'ols to ensure that employees do not add or delete 
services or equipment from a customer’s account without triggering a corresponding 
change to the customer’s billing record, 2“ Charter developed these controls to 
minimiz.e human error during the order entry process. The Subcommittee 
discovered that Dish has used a comprehensive set of similar controls since it was 
launched in 1996.2'' 

Second, Charter’s Billing Quality Assurance team, which comprises 21 
employees, samples bills to ensure accuracy. 2« As explained to the Subcommittee, 
Charter sometimes changes its bill (e.g., in how it groups charges), and the Billing 
Quality Assurance team is tasked with reviewing applicable bills to ensure that a 
billing change has not introduced mass errors into customer bills. 2'‘i The Billing 


25 To be clear, Charter has identified certain service overcharges and corrected those overcharges 
retroactively. For example, in October 2015, Charter identified a systemic issue with certain digital 
receivers which caused approximately 50,000 subscribers to be charged for Video-On-Demand 
content that they may not have purchased. Charter notified the affected customers and credited 
their accounts. 

Interview with Mike Ciszek, Charter Vice President, Billing (May 26, 2016), 

See infra Part II. C. 

25 Interview with Mike Ciszek, Charter Vice President, Billing (May 25, 2016). 

® Id. 


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Qviality Assurance team also I’eviews a random sample of bills to check for 
additional systemic errors that should be corrected.*'"’ The team is unlikely, 
however, to detect one-off errors, including when customers are overcharged for 
equipment or programming. 

Third, beginning in August 2015, Charter undertook what it calls a 
■‘controller reconciliation,” in which the company has begun to reconcile its billing 
records with equipment data from its 35 “controllers” throughout the country.'” 
Controllers are pieces of equipment that communicate with set-top boxes to svipport 
the delivery of video services by activating or deactivating the set-top box. They 
hold equipment information at a single point in time but are not designed to be a 
reporting tool and do not store historical data. As a result, account history and 
reporting information is unavailable through the controller. Despite these 
limitations, Charter can send a signal from its billing sj'stem to its controllers and 
identify each set-top box operating on a customer’s account and the associated 
authorized services. Charter treats that data as the definitive source of what 
hardware is actually in use hr' each account and what services are authorized.’’^ 

To date, Charter has completed its controller reconciliation for 27 of its 35 
controllers.'"’ Charter will finish that process for the remaining eight controllers in 
June 2016,” So far. Charter has identified approximately 11 million set-top boxes 
in use.'” Charter told the Subcommittee that the dollar amount associated with 
overcharges was $4*12,691 per month.’® Moreover, Charter told the Subcommittee 
that its controller reconciliation had identified 5,897 Missouri customers w'ho were 
overcharged,’’’ for an annual value of approximately $494,000.” But because the 
controllers do not store historical data, Charter says it is unable to estimate the 
total amount of revenue it has generated from equipment overcharges. 

Fourth, Charter has instituted a daily systemic reconciliation of equipment 
charges w'ith equipment in use. That daily reconciliation identifies all customers 
whose equipment charges exceed the number of pieces of equipment on the 
customer’s account. The company then removes any excess set-top box charges from 


”> Id. 

Each of Charter’s 35 controllers corre.spond to a particular coverage area. For example, Charter 
has a St. Loui,s controller that is u.sed to communicate with customers' set-top boxes located in 20 
Missouri municipalities. Charter 40,187. 

Interview with Mike Ciszek, Charier Communications, Vice President, Billing (May 25. 2016). 

'” Email from Brian Benczkow.ski, Counsel to Charter Communications, to PSI (June 8, 2016). 

'V Id. 

’’ Interview with .Mike Ciszek, Charter Communications, Vice President, Billing (May 25, 2016). 

Letter from Brian Benczkowski, Counsel to Charter Communications, to Senators Rob Portman 
and Claire McCaskill, at 2 (June 10, 2016). 

•” Id. 

® Id. 


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the cvistomer’s account via an automated process. According to the company, that 
process should prevent all equipment overcharges in the future. 

Charter explains that it was not able to conduct further investigation into 
how long customers had been overcharged because its controllers do not 
automatically and continuous^ log the equipment in use.S9 Nonetheless, the limits 
of the controller data do not mean that Charter is powerless to identify how long a 
customer has been overcharged and nothing prevents Charter from reviewing 
affected customers’ bills and equipment records to identify when a charge appears. 

* * * 

It is possible for both Time Warner Cable and Charter to do better by their 
customers. As discussed below, other M^TDs have implemented practices that 
either (1) use brute manpower to identify how long a customer has been 
overcharged and automatically grant a refund or credit or (2) do more to minimize 
mismatches between billing records on one hand and equipment and programming 
records on the other. 

II. By Contrast, Comcast, DirecTV, and Dish Automatically Grant 

Credits or Refunds to Overcharged Customers. 

By contrast to Time Warner Cable and Charter, Comcast and DirecTV 
provide automatic refunds or credits to customers who have been overcharged by 
their billing systems, while Dish’s billing system is designed to prevent these types 
of overcharges from occurring in the first place. 

A. Comcast’s Policies and Practices. 

During the course of a year, Comcast processes approximately 35 million 
“transactions,” constituting approximately 287 million “billing interactions”'*® — the 
total number of line items billed to Comcast customers. 

Comcast informed the Subcommittee that it has never relied solely on 
customers to detect system overcharges and trigger the need for refunds or 
credits."*' Instead, Comcast uses an audit process similar to Time Warner Cable’s — 
except that, once Comcast identifies an overcharged customer, it takes steps to 
identify how long the customer has been overcharged, notify the customer, and 
automatically apply a credit or provide a refund to the customer’s account. Using a 
program calling Lavastorm CPE, Comcast compares its billing records to its 


Id. 

I® Letter from Reginald Brown, Counsel for Comcast Corporation, to Senators Rob Portman and 
Claire McCaskill, at 1 (June 21, 2016). 

" Interview with Ernie Pighini, Comcast Corporation, Senior Vice President and Controller (May 10, 
2016) (hereinafter “May 10 Pighini Interview”). 


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equipment and progi’amming records to identify mismatches. *^ Historically, 
Comcast perfoi'med these checks on a monthly basis, but starting in late 2015, it 
began to perform these checks on a weekly basis, in order to maintain more 
accurate billing records. '** Comcast believes that its billing-error rate is 0.3 
percent." Once Comcast has identified mismatches between billing and equipment 
records, it investigates each individual mismatch to determine if the customer has 
been improperly billed."* Comcast has several groups of employees responsible for 
conducting those investigations, including a team of 20 employees who work in 
Revenue Assurance at Comcast’s Philadelphia headquarters and additional 
employees scattered across the country who perform similar functions."* In 
addition, Comcast’s West Region has approximately 40 employees dedicated to 
investigating instances of undercharging and overcharging.*" 

After weeding through the list of billing mismatches, Comcast then corrects 
customers’ bills. Like the other MWDs, Comcast corrects undercharges 
prospectively but does not impose retroactive charges on customers."* In the case of 
overcharges, Comcast takes an additional, resource-intensive step that Comcast 
described as a “challenge.”"* For each overcharge, groups of Comcast employees use 
customer billing, service, and equipment records to determine how long the 
customer has been overbilled. ***> Once it has that information, Comcast 
automatically applies a credit to the affected customers’ account, s. 

B. DirecTV’s Policies and Practices. 

DirecTV uses a substantially different method of identifying and correcting 
billing errors than its competitors. Instead of conducting regular audits, employees 
in DirecTV’s Revenue Assurance Department use a commercial off-the-shelf 
software product called SAS Enterprise Miner to develop and implement business- 
analytics tools that continuously search for billing errors.*** DirecTV says its 
ultimate goal is to identify and correct errors before bills are sent out, obviating the 


June 9 Pighini Interview. 

"* Id. 

Letter from Reginald Brown, Counsel for Comcast Corporation, to Senators Rob Portman and 
Claire McCaskill, at 1 (May 2, 2016). 

"* May 10 Pighini Interview. 

*'* Id.-, June 9 Pighini Interview. 

'** May 10 Pighini Interview. 

■18 Id. 

June 9 Pighini Interview. 

Id. 

•*< Interview with Kent Mader, AT&T, Inc., Vice President, Customer Risk Management (June 10 
2016). ' ’ 


10 



98 


need for it to take further action, but it also uses these tools to identify and correct 
errors on past billsC’^ 

When DirecTV identifies past billing errors, it uses a macro to fix the error. 
Like the other ]\WPDs, DirecTV corrects undercharges prospectively only.®* When 
DirecTV identifies an overcharge, it uses a macro to correct the error prospectively 
and then uses its business-analytics tools to determine how long customers have 
been overcharged.®* DirecTV told the Subcommittee that it goes as far back as 
necessary to determine how long the customer has been overcharged.®® In some 
cases, DirecTV has granted ci-edits worth thousands of dollars.®* 

DirecTV’s Revenue Assurance Department consists of 12 employees, who are 
tasked with detecting flaws in the logic of DirecTW s billing system that can lead to 
billing errors and implementing business-analytics tools to detect those flaws.®® 
According to DirecTV, Revenue Assurance employees accomplish this task using 
several techniques: When DirecTV rolls-out new offers for customers or otherwise 
changes a billing practice. Revenue Assurance employees study' the changes being 
made, anticipate what could go wrong, and implement analytics tools to detect 
potential problems.®* The Revenue Assurance Department also notifies the division 
of DirecTV responsible for fixing the problem.®** In addition, Revenue Assurance 
employees interact with employees from all over the company' regarding billing 
errors and implement analytics tools to identify those problems.*® 

C. Dish’s Policies and Practices. 

Like DirecTV, Dish does not rely on regular audits to identify and remedy 
billing errors.*' Instead, Dish’s billing and provisioning systems (which Dish 
employees use to add or remove equipment and programming from an account) are 
linked, meaning that any changes to a customer’s equipment or programming are 


® Id. 

53 Id. 

5-1 Id. 

35 Id. 

35 DirecTV 94,676. 

3' Interview with Kent Madev, AT&T, Inc., Vice President, Customer Risk Management (June 10, 
2016). 

58 Id. 

5 » Id. 

“ Id. 

51 Interview with Shannon Picchione, Dish Network, Vice President, Billing and Credit Operations 
(June 9, 2016). One possible e.xception is that Dish regularly monitors customers’ credit balances to 
determine if a customer is accruing a targe positive balance. When Di.sh identifies a customer with a 
large credit balance, it credits the customer’s account and contacts the customer to inform him or her 
of the situation. 


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99 


automatically reflected on the customer’s bill.'>^ According to Dish, it is impossible 
to add or remove equipment without altering the customer’s billing records.®^ 

Dish provides each customer with one free “receiver” — Dish’s term for the 
equivalent of a set-top box — and charges $7.00 to $15.00 per month for each 
additional receiver a customer has.'>‘* That is the onlj' equipment charge. Dish’s 
system will only send a television signal to receivers that have been “activated,” 
which happens as part of the installation process.®^ Once a receiver has been 
activated, the customer’s hilling information is automatically updated to reflect that 
addition. That system ensures that no receiver is added to a customer’s account 
unless it has been activated. 

Dish customers return their receivers by mail. Dish provides a packaging 
label so that it can track the receiver once it has been mailed. When the receiver 
returns to the Dish warehouse, an employee scans the barcode on the receiver, 
which removes the receiver from the customer’s provisioning records and, in turn, 
from the customer’s bill.*'"' 

Dish informed the Subcommittee that its hilling and provisioning systems 
have been linked in this way since the company was launched in 1996,®* As a 
relatively new market entrant — at least compared to the incumbent cable 
companies — Dish has enjoyed the benefit of more advanced billing and provisioning 
software throughout its history, enabling it to create a billing system that simply 
avoids many of the billing errors some of its competitors must confront on a regular 
basis. But Dish has also invested substantial resources in keeping its systems up- 
to-date; It spent many millions between 2009 and 2011 to upgrade its billing 
system.® 

* * * 

All MVPDs make billing errors, but unlike Comcast, Du-ecTV and Dish, Time 
Warner Cable and Charter have failed to provide refunds oi' notice to overcharged 
customers. Although both Time Warner Cable and Charter point to technical 
limitations that make it difficult to determine how long a customer has been 


« Id. 

Id. 

« Dish 6,596. 

“5 There are two ways to activate the receiver. First, a Dish technician can scan a barcode on the 
receiver. Second, the customer can provide the receiver’s serial number to a customer service agent, 
who enters the serial number into Dish’s provisioning system. 

Interview with Shannon Picchione, Di.sh Network, Vice President, Billing and Credit Operations 
(June 9. 2016). 

6' Id. 

Id. 

Id. 


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overcharged, their competitors’ systems demonstrate that it is possible to 
implement more effective policies. 

III. Actions Taken as a Result of the Subcommittee’s Investigation. 

As a result of the Subcommittee’s work, both Time Warner Cable and 
Charter have changed some of their policies for handling overcharges. 

As e.xplained above, each month Time Warner Cable performs an audit to 
find overcharges. Going forward, the company will provide an automatic one-month 
credit to all customers for each piece of overbilled equipment or service. Time 
W’arner will not investigate when it began overcharging those customers unless 
customers bring specific concerns to the company’s attention. Nor will the company 
automatically provide a full refund dating to when the overcharge began. But the 
company’s new policy will at least provide customers with notice that they have 
been overcharged, making it easier for overcharged customers to determine whether 
they should request a larger credit or refund. 

Charter has decided to give its customers a one-year credit for any equipment 
overcharges. In addition, Charter has implemented systemic controls that it claims 
will prevent equipment overcharges in the future. Although neither Time Warner 
Cable nor Charter’s new policies represent complete solutions to the problems 
highlighted during the Subcommittee’s investigation, they are a first step toward 
ensuring that they credit or refund customer overcharges. 


13 



101 



Inside THE Box 


S! \l i !•■! ;■ >|{! 


CLAIRE LlcCASKlLI 




102 



Millions of Americans rely on their cable or satellite television provider to deliver news, entertainment, 
and other television programming. However, many customers are deeply dissatisfied with their cable and satellite 
television providers. 


This report focuses on customer service and billing practices at three of the largest cable and the only two 
satellite television providers in operation when the Subcommittee's investigation began in 2015: Comcast 
Corporation (Comcast), Time Warner Cable inc. {Time Warner Cable), and Charter Communications, Inc. (Charter), 
AT&T Entertainment Group (DirecTV) and Dish Network Corporation (Dish). At the end of 2015, these companies 
collectively had more than 71 miHior\ subscribers. This represented about 72% of ail American households that 
paid to receive television programming and more than 53% of all American households. 

Many cable and satellite customers have been frusb^ted by the cost and complexity of their bills. This report 
reviews four of the most freauent areas of complaint related to billing for new and current subscribers; (1) the 
initial pricing, (2) expiring promotions. (3) additional fees and changes, and (4) price increases. This report also 
reviews the adequacy of the cable and satellite providers' efforts to explain their billing practices to customers. 

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Compounding customers' frustration was the rising price for cable and satellite. Ai! of the companies in this 
investigation have increased their prices since 2011, with the cost of some packages increasing by as much as 
33%. While ail of the providers notified customers of upcoming price increases, this notification was not always 
effective, A 2013 internal DirecTV study found that the provider's notices were only effective at alerting 16% of 
subscribers that prices would increase. 




103 


Beyond pricing, customer service remained a problem for the cable and satellite industry. Our investigation found 
that customers faced difficuities getting their problem resolved by their cable or satellite provider. In December 
2015, for instance, 40% of a sample of customers who called Comcast with a billing problem were unable to 
resolve it on the first calS, In December 2014, DirecTV found that 36% of callers contacting the billing department 
were unable to fully resolve their issue. Charter noted that approximately 20% of callers were not able to solve 
their problem on the first call. In addition, based on 2015 customer survey data provided by Time Warner Cable, 
only 42% of customers agreed that Time Warner Cable "has the ability to resolve your problem on the first call," 

In addition, when customers called about a problem, they had to listen to sales tactics. For example, when Time 
Warner Cable customers called to ask about price hikes, the company labeled it as an "opportunity" to upself 
them, and advised agents, "[tjhe price adjustment brings with it an opportunity to upseil customers." Regardless 
of the reason that customers may have called, Comcast told its employees to "uncover 'hidden' needs" of their 
subscribers for additional services. Upselling annoyed enough customers that Dish instructed its agents to note 
when subscribers ask never to be upsoid. However, but for the case of certain exceptions, such as customers 
calling in with service problems, most Dish agents were required to upseil on every call— even when customers 
have rejected an initial upseil on a previous call. Cable and satellite providers expected that customers would be 
frustrated, and devoted a considerable amount of effort into training their customer service representatives to 
interact with customers who are surprised and upset by the high price of their service. 

Finally, when customers decided that they wanted to cancel their service, they faced difficulties in doing so. 
Rather than simply disconnecting the service online, customers must either visit a retail store or cal! and speak to 
a company’s "retention" agent. As stated in aTlme Warner Cable training document, the goal of the retention 
agent was to "do the opposite of what the customer is calling for. If the customer is calling into cancel, your goal 
is to not cancel the services! And if the customer wants to lower the bill, you're going to try to avoid that, and 
perhaps even raise the bill!" A!! of the companies in this review trained their retention agents to follow a similar 
process, which included; (1) asking probing questions to determine how customers use their service and why they 
want to cancel; {2} proposing "solutions" to address the customers' stated reasons for canceling their service; and 
(3) overcoming objections from customers who do not want to answer questions, or who do not accept the 
proposed solution, 

Cable and satellite providers trained their retention agents to continue the probing proces.s after customers have 
indicated they do not want to answer questions and simply want to disconnect their service, For example, Time 
Warner Cable, DirecTV, and Dish had their agents practice overcoming objections from customers like, "Please 
disconnect me today, I don't want to go into detail," and "Just cancel the service." Prolonging the process, 
retention agents made repeated offers to keep customers. Dish and Charter indicated that after a customer has 
objected to an offer twice, agents should start the process over; however, Charter added that, "{w]e will not need 
to start from square one, but we will need to overcome hesitations before moving to an agreement." After 
meeting with the Subcommittee, Comcast stressed to its retention agents that its policy allowed them to stop 
trying to "save" the customer if the customer refused or became upset by a retention agent's request to ask the 
customer questions about their decision to disconnect. 


- 2 - 



104 


Customers attempting to save money by downgrading or dropping a service from their package were often 
routed to the same retention agents. Cable and satellite providers trained their retention agents to minimize 
downgrades and the associated loss of revenue by following a step-down process in which the offers made to the 
customer progress in a .stair step fashion, with the offer that has the greatest financial impact on the provider 
made last. However, in the case of Time Warner Cable, some agents claimed that the offer made is the best price 
"at that time/' despite the fact that lower offers were available. 

Cable and satellite providers have acknowledged the need to improve their customer service, and provided 
information to the Subcommittee regarding their efforts to identify and address customer pain points and 
improve the customer experience. 


BACKGROUND 


Millions of Americans rely on their cable or satellite television provider to deliver news, ent 

and other programming.^ These providers are known collectively in the cable and satellite industry as 
"multichannel video programming distributors" (often referred to as "MVPDs"). They range in size from large 
companies such as Comcast and DirecTV, which have millions of subscribers, to local cable operators that may 
only have a few hundred subscribers. While cable and satellite providers are often colloquially referred to as 
"cable companies,” in industry terms a "cable operator" specifically refers to a company that provides 
programming via coaxial or fiber optic cable. Satellite providers use satellite signals to provide programming. 
While this report focuses on the television programming offered by cable and satellite companies, the companies 
also provide internet, telephone, and sometimes home security services. 


At the end of 2015, three of the largest cable companies and the only two satellite companies collectively had 
more than 71 million video subscribers. This represented about 72% of ail American households that paid to 
receive television programming and more than 53% of ail American households. See Figure 1. 


Even though millions of Americans subscribe to cable and satellite providers, they are deeply dissatisfied with 
their providers, The most recent American Customer Satisfaction Index (ACSI) survey found pay television service 


This report doos not tiddrc.?,*! video service provided by relecfrnimunicijtions .service providers, sueb a.s Verixoii FiOS or AT&T U-verse, 
Dor does it include Google Fiber. Combined, these companies .serve 1 1,176.000 subscribere, <yr lous-bly J 1'1'i ofall \mico sut>scribcr 
horischokis. However, the cable and scitcllite providers discussed in this report serve a large majority (about 72%\ of all subscriber 
households. i,vogh. I dw s I’Wn* .St/fecr/te-GVowtA RCUTER.S (Mar. 3, 201bj (online at hup fqiiiuK uirri OldUi 0 ) 

nbci vidi.0 subsuitHi grovvib) yorfon /fear.? n H-'/ro, MoFFETTNATUANSONRcstWRCU (Mar 3 2016) (online 

ithlljv. iwihttu Afahr Pav n\ProvUlcrs Mldetf Ahom /O.OOO SuhxiTiU'r-! in IQ ‘>()!6 1 t-trHTM NV 

Rl-.sEAitcH (..>)v(.)Ul> (May 17, 2t.)lt)) (mdme at http:.7w\vvv.lcichtin;mreseareli.com/ pre.S5/ 0S ) •? ! drcleaso.him h. 


-3- 




105 


scored second-to last in customer satisfaction out of the 43 industries it studies.^ This 2016 survey, which was 
based on polling 70,000 consumers, also found that while customer service in the cable and sateiiite industry as a 
whole had improved slightly from the year before, there was no other place to go than up. The previous 2015 
survey found that the pay TV industry tied for the lowest score out of all 43 industries it surveyed.^ 

Other polls confirm that Americans have an unfavorable opinion of the customer service provided by their cable 
and sateiiite providers. In 2015, a Consumer Reports survey found that 20 out of 24 cable providers received the 
lowest score possible and stated that "along with death and taxes, lousy cable service .seems to be one of life's 
certainties."^ Comcast, Time Warner Cable, and Charter ail rated near the bottom of these survey results.'’ in 
2016, another survey of 10,000 consumers found that more than 20% of consumers who had interacted with TV 
providers reported having a bad experience during the previous six months, the highest level of any industry.® 
Comcast and Time Warner Cable had the highest levels of consumers reporting bad experiences among cable and 
satellite providers.^ Finally, in 2015, Comcast, DirecTV, and Dish were all listed on 24/7 Wall Street's "Hal! of 
Shame," a list of the 10 companies with the worst customer service ratings based on a survey of 1,500 American 
adults.® According to the survey, high prices and poor customer service were the biggest consumer complaints.® 


- American Customer Smistaction InOe\. ACSl 'IVIccowmiinkaiions Rqwi 20}fy (online at !mp:/.'wwH'.lhcacsi.org/news-iind- 
re.'»ources/custoinei'-saiiNfac!ion-rvpi>]is/rc(ion.s-2016/ncsi-tc!ccomiiHinioations-ieport-20l6). 

’ ACSl '/IVi’f'ONi Report Shorn Comixiilive huhmriex llawHighrrCiisfotiierSatixfiu tioii, (.Itinc i, 2016) (oniino at 

http://vvww,riei'cccabtc.coin''pvess-rclt'itse.sm(.’Si-tcleeoni-a'|*(«l-shows-campctitivc-iiHlustvi<;s-havt;-liij{her-ciisl«iiicr-satjs). The last iilaoe in 
2016 to intcmci serviee providers, sonic of whom are also television piovidcts. 

■* lirad Ttitiic, Ewit/or Ciihle IT. Thc.fc Cii-'HofiicrSiilhfiiclitni Rating.'! aiv Horrible. TiMi- (May 2‘), 2015) (oniino st 
iittp://time,com/iiiont,7/3‘HtlS,12/cabio-tv-nitina;s-imc.me(). 

yd. 

New Tcmkin Cwup Rc.-ieairh Show.t that Coiixurnm Haw A/ej.vr Rad Experiences With AirTtvn /l/rwoia-, Time iVanwr Oihle. Comcast, 
and HSISC. MOKNING Star (Mai , 30. 2016) (online at Iiltps://www.momiiig.sliir.conVncws/pr-iicws- 

wiix'/.PRNews.20!6t'l330PH,S7(>02'iiew-tcnikiii-p'(>ii)v.reseiirch-show.s-t!iai-constiint-i-s-bavc-m<.ix(-!ii)d-<.ixporieiico.s-wit)i-fiiriv!.m-;jinvHys- 

lime-warner-cablc-comcast-and-h.sbc.hlmh. 

'‘Id. 

^ Cmomer Sm’ire Nall of'Shame. 2417 W.xu.'irmnr {My Zi. 201 5) (online at http;//247wal!st.com/spccial-rcpoi-t/2015/07/2.3i'cn.stonH'r. 
seivice-iiall-oJ-shampM). 

"'Id. 



106 



TV PROVIDERS 


Charter 

fej 

DIRECTV 

dl^ 


VIDEO 

SUBSCRIBERS'" 

COMPANY 

VALUE” 

ESTIMATED % 

OF ALL 

; HOUSEHOLOS'2 

ESTIMATED % 

OF SUBSCRIBER 

HOUSEHOLDS'^ 





22.400,000 

$145.67B 

16.72% 

22.4% 

11,056,000 

$59.66B 

8.25% 

1 1 .06% 

4,445,000 

$25.77B 

3.32% 

4.45% 





20,112,000 

$47.1 SB 

15.01% 

20.11% 

13.874,000 

$25.23B 

10.35% 

13.87% 


Major Pay-7V ProvuP'rx Atkkd Ahaul 10,000 Suhxcrihcr.x in IQ 2016^ Leichtman Re.si-arch Gri.h.'I' (May 1 7, 20}6> (onitne ai 
htt.p;//w\^'w,!ckl!miui)r<'S«aTch.ccini'i>ress.'0517i6reieasc.htinJ). This data is current as of JhcoinJ ot ihc fii:sl. quarter of :’01 6, Since the 
investiRfiiiot! begiin. 'rinie Wartier Cable aoil trharter iijcrgcd. and DirecTV merged witii AT&T. Wjrli die acKiition ofA'r& r's U •Verse 
sul^sei'ibet's, Direc'l'V wouW have :25.172,00() total video subscribers. Id. 

'* YAiiOO! FfNANCE (hf!p://rmBnce,yahc>o.c.om) (accessed June 3, 2016), 

'* These i>cveeiitages ivcre calculated by dividing the number of each provider’s subscribers (pn->vi<ied in ihe first column) by die total 
number of U.S. households (as idemificd in die U-S. Census Bureau July I, 2015 population estimate. U.S. Census Buresui, Quick Fatu 
(online at htlps://www.ccnsas.gov/()uicfcfacts/'table-'PST04.52!5,'-'00) (acoascci June 6, 2016), 

''Jon l,atayette, Nielsen: Fay-TV Jhmeholds Dip Behw MfW.BROAlX'ASTINC,! & Cable (MtiT. 24. 2016) (online at. 

http://wwrw,broaik'astiHgcuble.Cf.mvncws!eurreiicy/nie!sen-p3y-lv-hou5eholds-dip-belf)w-I00ni.' 154022). 

-S- 




107 


One of the most widely used measures of customer satisfaction is a Net Promoter Score, or NPS. Essentially, a 
positive NPS indicates that a customer would recommend the service or product to a friend. A negat ive NPS 
indicates that a customer would not— or would even dissuade a friend from purchasing it. The more effort it takes 
a customer to deal with a problem, such as multiple calls to the company, generally poor customer service, or an 
ultimately unresolved issue, the lower a company's NPS score.^'* Using data for 2015, the most recent year for 
which the Subcommittee has access to iriformation for ail cornpanies, ail of the investigated cable providers had a 
negative NPS.^^ Dish had a positive score for new and existing customers^® and DirecTV had a positive score for 
new customers^^ but a negative score overall.^® 

Although cable and satellite companies have troubling scohes in customer satisfaction rankings, they note that 
most of the millions of interactions with customers are satisfactory. For instance. Charter stated that "To be 
clear, not all or even most of the calls received by Charter can be' characterized as customer 'complaints,'" Time 
Warner Cable's measures its customers’ satisfaction through automated surveys, 87% of customers gave Time 
Warner Cable an 8, 9, or 10 (with 10 being the most satisfactory) through the third quarter of 2015. Comcast 
noted that "...the company services roughly 27 million customers and receives more than 1 million customer calls 
in a given day across the country. Issues that arise with even a very small percentage of these interactions will 
stiil constitute a sizeable raw number if viewed in isolation."^® 



Given the importance of cable and satellite television providers to millions of Americans and the 
frustration that many of them experience as customers, the Subcommittee began an investigation of the 
consumer practices at three of the largest cable and the only two satellite television providers in operation at the 
time the Subcommittee's investigation began in 2015: Comcast Corporation (Comcast), Time Warner Cable Inc. 
(Time Warner Cable), and Charter Communications, inc. (Charter), AT&T Entertainment Group (DirecTV) and Dish 


’’ SV-<^COM:CAST-PSI-000:i.?l84 - )87;<:<'>MCA.ST-PS1-00012254; • 

<;:OMCAS'iM'Sl-l)!)()i2<)4(>;TW(’-«0017497; CHTR-AiypD-PSI-000i4‘723.Cc.niw-isfs cunvut NP.S score is (K.>si{ive, .{..cifer Irooi 
R<;ginaid J , Brown, Coimst’l for Coniciist. n> Chainran PorMmB and Ranking Member McCirskill (June 1 8, 2«16). 

Email from Sanifi Leggin, C'oimsel for to Subcommittee (June 7. 2016) (X’SC finanoiu! Review •• December 20! 5", at tiiitie 8.; 
“8AM .Executive Staff - Oi>eralions WE 12.25.15", at slide 3}, 

DTV-PSl-0094546. 

'M'.)TV-PSI-0094547. DirecTV,>i current overall NFS score is positive, DTV-PSI-0094680. 

Letter tfom Michael D, Bopp, Counsel foi- Tirne Warner Cable, to Chainnan Porlman and Ranking Member McCaskiil f.Iune 1 5, 2016). 

• Letter flovn Brian ,A. Benezkowski, Counsel for Charter, to Giairman Portman and Ranking Member McCaskilt (Nov. 5. 2015); (.utter 
tfom Regifiald J. Bro w'n. Counsel for Ctuncast, to Chairman Pottman ant! Ranking Member .McCaskilt (Feb. 23, 2016), 


-6- 




108 


Network Corporation (Dish). During the course of the investigation. Charter acquired Time Warner Cable, but the 
two entities will be treated separately for this report. AT&T, which operates a video provider known as AT&T U- 
verse, acquired DirecTV during the investigation. 

As part of its 13-month investigation, the Subcommittee received information and documents from Comcast, 

Time Warner Cable, Charter, DirecTV, and Dish. The Subcommittee reviewed documents regarding past and 
current policies related to customer service, price and fee increases, disclosures provided to consumers, retention 
and downgrade call handling, as well as data related to price increases, customer service spending, the margins 
made on fees, customer complaints, churn, and satisfaction. Many of the documents provided by the cable and 
satellite companies that described customer complaints and dissatisfaction were generated by these companies 
in an effort to improve customer service. Ultimately, the Subcommittee received more than 93,000 documents 
and conducted do 2 ens of foHow-up interviews to better understand the documents provided. 

The Subcommittee interviewed cable and satellite providers regarding customer complaints, policies related to 
call handling of customer service requests and requests to disconnect or downgrade service, the establishment 
and underlying cost basis of fees added to customer accounts, company policies for disclosing price increases and 
promotional price roll-offs to customers, and the extent to which companies provide refunds to customers they 
have overcharged or who have a credit on their account when they terminate their service. The Subcomntittee 
also interviewed customer service and retention representatives from the companies to gain an understanding of 
how customer service agents apply policies that govern their interactions with customers. Additionally, the 
Subcommittee interviewed local and federal regulators that interact with cable companies, as weli as consumer 
advocacy groups and groups that conduct consumer research, including the Federal Trade Comniission (FTC) and 
the Federal Communications Commission (FCC), as well as the National Association of Telecommunications 
Officers and Advisors, and local regulatory officials from across the country. Finally, the Subcommittee also 
interviewed consumer advocates and researchers about the cable and satellite industry. 



Many cable and satellite customers are frustrated by the cost and complexity of their bills. This section 
reviews the four most frequent areas of complaint related to billing for new and current subscribers: (1) the initial 
pricing, (2) expiring promotions, (3) additional fees and charges, and (4) price increases. This section also reviews 
adequacy of the cable and satellite providers' efforts to explain their billing practices to customers. 


.Surah Rabii & ioc FliiiJ. Chwii^r Gsmimnikoiion.'! Com/\k't<rs .Aviiiimtion q/Timc Warner Cahfc, Wali St, ,f. (May 25. ;h)l 5) !onli)H> a( 

hti:p://www,wsj.conWirticks/oh;)rier-e»miiuni!C3tions-nearing-dc3l-ibr-time-wanjer-cab!c-]4h2.S(W555). 


- 7 - 




109 


Promotional Pricing 

One common complaint leveled against cable and satellite providers was that they did not adequately 
disclose the price of their service in advertising or at the point of sale. For example, in 2014, 23% of DirecTV 
subscribers who responded to a survey reported that they felt misled during the sign-up process. Of the 
customers who felt they had been misled, 37% of complaining customers felt that DirecTV customer service 
representatives misled them during their sign-up phone calt.^^ Similarly, in 2012 and 2013, as part of an effort to 
improve its customer service, Comcast reviewed data concerning "escalated complaints" — complaints that had 
been elevated beyond the customer service representatives and supervisors related to billing errors— and found 
that, in 10% of such complaints, customers reported they had been quoted the wrong price at the time of saie.^'^ 
During the limited periods surveyed in 2012 and 2013, as many as 30% of the customers whose complaints 
related to billing errors were escalated stated that a Comcast representative had quoted the wrong price. 

Adding to this frustration and confusion, cable and satellite companies did not always immediately inform 
customers about the lowest price option available to customers.^® For example, customer service representatives 
at DirecTV were told to only offer the lowest price option "if [they] will lose the sale," as this package was only 
used as an option for customers who were considering cancelling service. Similarly, customer service 
representatives at DirecTV, Time Warner Cable, Comcast, and Charter were instructed to first attempt to sell 
customers higher priced packages before moving to less expensive options based on the customers' reactions.’^ 
in some cases, the lowest price option was difficult for new customers to obtain. For example, Charter did not 
offer a basic package at ail on its website, and customers clicking to see the available video packages on 
Comcast's website were not shown the lowest priced options unless they click to see additional offers beyond 


DTV-PSi-0017314 - 315, Survey res);«.>r<!cnls could .•?ck:ct several (>ption.s rclak'd to wluit they felt wii.s tnisictidiiig, hi. 

Id. DirecTV also conducted a survey of its own service lecUnicians about the most lhi.<ar.iiii)]> aspects of DirecTV for the customer, 
“since 110 one knows [tiic cuslomeii belter than [they dol." Oflhc responses liiat identirKHl pixiblcuw with the call ccnici' experience (which 
eompri-sed 24% ot'ali rc,s]wn.se.s). the most cominottiy cited issue was that the call center had ptvvidetl 
‘'iiusiuformiuiou/iniscomimmicattons on Sales Call.” l.>TV-psi-tK)5I92f'. at slides 2, 14, and 16. 

^•^COMCAST-PSl-OOU 1.3400; i:OMC,AST-l‘S!-00()l340:i; C()MC.-\ST-1’-SUKK)132!3; (’OMCAS'l'-l'‘SI-(M}()n'2IR; (.lOMCA.S'l'-r.Sl- 
00013223; COMCA,ST-!’Si-UOOI.322S; C()M(;'A,ST-lVSl-t)l)0i.l2.>2. Comcast noted that it luiiidled one tuilliou ctisioincr calls pet day and 
the number (jf eomplainis was a very smtdl percentape of this total. I.cttcr Ihun Rcyinald .1. Drown. Coim.se! for (.Vuricasi, to Cliainiian 
Poi'tman and Ranking Member McC’askill (.Inly 17. 2015). 

-H::OMCAST-PSl-00a!.34()0:COMf:AS'!‘-FS.I-no0l:3403: COMCA.ST-P,Sl-(h)01.l2CT<.'OMCA‘>T-FSI-nO{)]321R:COMCAST-I'Si- 
0()0!,3.22.T COMCAST-P.Sl-OOOi322S; C'OMCAST-I>S!-OOOt.V232. 

Permanent Subcommiltce on Investigations. Interview ofChaiicr Customer Service olTicials (May 31. 2016), 

D1 V-P,S1-0024300; .teller front Eleanor i. Hill, C'minsel for DirecIA'. to Chairman Portman and Ranking Member McCaskill (June 1 3. 
2016). 

CHTR-MVPD-PSl-000!2R9i; DTV-PSM‘H)7<>420; TVVC-()0l)l 1 167; CO.MCAST-PSI-(.Hi()l {.415, 

• 8- 



110 


those that appeared on the first screen.^^ Dish, on the other hand, had two levels of tow pricing: one for new 
customers which was advertised, and one for existing customers who were having trouble affording their 
service.^® 

Confusion When a Promotion Ends 

As part of introductory promotions for new customers, many cable and satellite providers offered 
introductory rates for the first year of service, and, in some cases, then provided a higher, but still discounted, 
rate the second year of service. In such cases, the customer's rate increased after the first year of service and 
again after the second year of service. 


[Dish] offered me a ton of discounts... Well- the discounts are over and iUl!ll l i!l! ll! il!MI 


dlS? 


SUBSCRiBER32 


For instance, in one of Charter's bundled service packages, the first year's rate was $89.97 per month, and the 
second year's rate was $109.97 per month. After that, the customer was charged $129,97 per month. After the 
expiration of all discounts, the ultimate rate of the package could be up to 50% more than the initial price. See 
Figure 2. 

Furthermore, customers were not always aware that the price would increase when their promotion ended or 
"rolled off." When promotional prices were advertised by some cable and satellite providers, they were in large 
eye-catching print, while the price that companies charge after the promotional price rolled off, or the "standard" 
price, was often only included in the fine print.^** See Figures. Regardless of whether it was because the 
difference between the promotional and standard price was not adequately disclosed at the time of sale or 


•" XJliiily, Marne Page (htip:.''/\vsvw..vrinily.vi>i)V'CoiporaitvLt'nrn-'Diei(3iC3hle.'digiiiiIcablc.h(tub (accessed .lunc 3, 20ift>i Chartoi'. Home 
Page (https:/, /WWW, cljaiter.ciHiVbrow.se/catiient'Jv) (!icces,scil June 3, 20l<>),Cliar(cr iasisteti that (lus lowest price ofTenng wa.s not available 
on its webpage because it liki not proviilc the same value as il.s oilier packages because many of the iiichiderl clwniids eoiiid be iiocesscd 
withotil cable service through an antenna. Penminciit SulK-ominittee on Investigations. Inicrview ofChaner Customer Service officiais 
(May 31. 2016), 

Pennanent .Siibcammitlee on Investigations, ( 'all with JelTHlum. Counsel lb« Dish Network (June 15, 2016), 

The .second-year rate, while still an increase over the first year, was lower than the full retail rale. 

Ci)nsi.imev eontpiaint (June 12. 2016) tonlinc at iiiins:.vwM w .cot ts »rnui anhti-scoiiv‘cahle iv/ dis l i n elwork.luinh (accessed Jntic 20, 20! t>). 
This conipiaint, like others provkicri. i.san c.sampie ofonc customer’s experience, ami is not intended to he representative of all custoniei .s. 

CHTR-MVPD-P,Sl-00000770. 

iSVc. e.g.. Comcdsi Ctirivni 0(lm (www. xfi»iiy.cont/Cori>orale.d-earivDigitalCablc/diuiiaicab!e,htnt I ) (accessed May iO. 2016). 


-9- 



Ill 


whether it was not prominently displayed in the advertising for the price promotion, the result was that some 
consumers were often surprised and angry when they later learned that their programming package price had 
increased after the first or second year.^^ 

FIGURF 2 : PRICS iNCRFAStS FOR CHARrCR'S BUNDLED StRVtCE PACKAGES, AS OF 2014*® 



SATES 


SERVICES 'isYEARl 

■ YEAR- 2 : 


Charter 

Triple Pkiy 

1 

TV Select + Internet 


! 

+ Phone $89.97 

$109.97 

$129.97 

TV Silver + Internet 



+ Phone $109.97 

$129.97 

$149.97 

TV Gold + Internet 

$129.97 

* Phone 

$149.97 

$169.97 1 

GhsrtBT single Play 


TV Select 

$39.99 

$59.99 

$59,99 

TV Silver 

$59.99 

$79.99 

$79.99 

TV Gold 

$79.99 

$99.99 

$99.99 


Cable and satellite providers were aware that customers become frustrated when their promotional price or offer 
ended, Internal analysis by Comcast, Time Warner Cable, and DirecTV all noted that promotional roll offs led to 
drops in customer satisfaction and commitment,^'^ DirecTV actually identified promotional roil offs as the period 


TWC ..00001227, 

CFriR-MVPD-i’SI-000()077t), 

- 10 - 




112 


in which customers were least likely to recommend DirecTV to others.^® in addition, Comcast concluded that 
"customers are at highest risk of churn [cancellation] at the time when they are rolling off their promotional 
rate/"'® Time Warner Cable referred to one period of high disconnects as a "hangover" from an aggressive 
promotional period that ended.'^^ Dish observed that the price increase after the first year of a two-year contract 
was the "biggest complaint customers have with the pay-tv industry."''^ 


{ Offered a special cable pricing offer for 12 month contract — however, [ have hod^^^^^ 
the pricing special..." 


Time 

Warner 

Cable 


SUBSCRIBER^ 


Cable and satellite providers provided some disclosure of promotion roH-offs prior to a bill change. Charter and 
Time Warner Cable placed messages in their bill before and after a promotion ended with Charter sending letter 
to customers whose bill would increase by more than $20 between five and seven days before their price would 
increase.’’'' Dish sends a message in the customer's bill or e-bill as well as a notification on the customer's set-top 
box that displays a message that the promotion is ending, while DirecTV includes a month by month count down 
during each month of a promotion in the customer's bill and follows up with a "what changed" notification on the 
following bili.”^ Comcast disclosed the terms of promotions in its marketing materials, required its point of sale 
agents to disclose that the customer will be receiving a promotional rate and what the price following the end of 


’'CH'rR-MVi’.D-l’Si-000M78();(:OMCA.S'r-l>SI-(l00r:;i0h;rOMC.-\ST.rSI-00(ii:i78;(,'t)M<:A.ST-P.S!-()<)012l98;TWC 
DTV-PS!-0()3097X; DTV.l'St-00:W)S6: DTV.|‘SI-(I(),V>9‘»>(. 

COMCAST-t’.Sl-OOlH2178, CUMCA.ST-PSI-iKWl^lOS; TWC_f)0()0!227; nTV-PS(4)016y78; DTV-PSM101C'ySl>; DTV-PSI-OOltSyyH. 
DTV-RSi-001('i97X; r)TV-l>SI-0DlWS6; DTV.PSUOO.IWWS. 

'"COMCAST-!’S!-OOUi:.R)(v 
'I'WC..()(I007')54; TWC.Or.lOO?*^)!, 

D!SH-PS12l)l5Nov.()0()425722 ("Koep in in miiul Ihat !Ik- i-omplaim cusjoukts have wiUi Jlic pay-tv imliisiry is ihai ilicv sign a 
two-ytar agreement:, hul flicir price inca-ascs alkr the Ili-sl ycai'.'').. 

*•' rwe^ OOO 1761 6. Tlii.s complaini. like others providwl, is an exniivpic ol'onc cicsioincr’s experience. {m<l is not intencicti to be 
representative of all customers, 

l,etltT from Miciuiel D, Ropp. Counsel for Time Winner Cjbic. to Chaimwn Ponman ;ind Ranking Mcmlwr McCaskill (May 27. 2016): 
Letter I'rovn Brian A, Bcnc/kowski. Counsel lor Charier, to Chairman Portmiin and Riinking Member McCiiskili (May !7. 201 (V>; Lmail 
from Brian A. Benc^kowski, Counsel for Charier, to SubcomniitiecUune 20. 2016). 

Permanent .Subcoiumiltee on liivesligafion.s. Interview of DirecTV Customer Service officials (May 25. 2016); Senate Pennanent 
Siibcommiltec on Investigations. Interview of Dish Customer Service o(fieia!.s(Mav 12. 2UI6) 


- n - 



113 


Figure 3: Example oe PRorMOTWNAL Pricing advertisement with Fine Prin't’® 


8^"= 


XFSNirY TV 



the promotion would be, provided the terms of the 
promotion in a post-order email following the sale, 
and noted on the customer's bill that they were on a 
promotion,*’^ 


Despite being notified, customers may still have 
forgotten that they were receiving promotional 
pricing and therefore may have been surprised by 
price increases, Some cable and satellite providers 
trained their representatives to handle customers 
upset by the changes. As noted in Time Warner 
Cable's training documents, "(cjustomers are 


Comcast Ciimm 0/fm { w vtimn 'Trjjoratc-iLeaiTi/DigjtalC^Wciii^ {accessed May tO, 20!6), 

^'I.ettcr iiotri Reginald .(, Hi t'wn, (.oimscl for Comcast, to Chairman Portman and Ranking Member .McC.’a.ski!l (May !7, 20'f6); [..-effet 
from Reginald J. Brown, Counsel for C omcast, to Chairman Portman and Ranking Member McCaskill (Juno 19. 20.16). 


- 12 - 


114 


informed that this price wili expire in 12 months, however, many customers are surprised by this change when it 
happens."'*^ 


f 




I noticed ... this month my bitl was high, so I looked more closely and noticed i'm being charged 
almost $40 per month for NFL Sunday ticket. ..i haven’t watched more than a day of footboii in 
my iife, and I realize that this was likely an automatic renewal for something i didn't realize we 
were given os a promotion when we signed up. i also realize this is super typical of cable 
companies and customers have to be on top of making sure they cancel this stuff, but in my 
opinion that's reoliy bad business. although its {sic) probobiy a 
good portion of your revenue, it’s not honest. ..Anyway, I called in to cancel it last night and I 
wasn't ablefo^pp^entiylVepassedsomekindofdeadiinewherelcarrt remove it from rny 


!sb now I'm stuck spending over $200 on something I don’t use. 


-DIRECTV suBscsisES'’^ 

Similarly, in Dish's training materials, they instructed customer service representatives that "[w]hen those credits 
roll off, customers' bills are going to go up anywhere from $14.99 to $44.99, depending on their service level. 
Because these credits were given three months prior, customers could have forgotten that they got them and 
when they see a large increase in their bill, they may become escalated. This is where you come 

in addition to promotional pricing, many cable and satellite providens offered free or reduced -price premium 
programming— such as HBO, Showtime, and Starz— to entice new or existing customers to add services to their 
package. While these offers were clearly beneficial for customers, they could also cause confusion when 
promotional programming disappeared and frustration when some programming was automatically renewed at 
full price after the promotion ended. 

Promotional offers could include free or reduced-price equipment, premium channels, gift cards, and other perks. 
For example, in 2016 both DirecTV and Dish offered premium movie channels (HBO, Showtime, Cinemax, and 
Starz) free for three months to new subscribers who purchased certain television packages and entered a two- 
year service agreement. Comcast offered new subscribers free Showtime for 12 months with the purchase of 
bundled television and internet service.^ Charter offered free digital video recorder (DVR) service for one year 


TWC.000()i:27, 

” I) I V*P61-00,?%72. Ihi.s complaint, like others Is an example ot one customer's experience, uiul is not tiiieiKlci.i to he 

vcpreseiifative ot all custonieis. While the customer complained about his billing, ho Jiii appreciate other aspects of l^irccTV ."icrvicc, TItc 
customer began. "I honestly do believe VliavTV has the best nwtrall user experience for cable, it'.v great 1 can't complain Ihero a! all,'’ /.7, 
DISH-}'S120l5Nov-.00a4107l7-71R{cmphasisadded). 

DinKTVSIwppin)'Cm-i (http.s:,7Awdircctv,com./D!V,\l»p/pcp<Ki..’conngnrc.jsp4packagc-.sa;tion) (accessed Jiitie 13, 2016); /)«•/; jr 
Packiipes in your Aren )'iiUps;.'/w\vw.jnrmiiydi.sh.cotmdisli-iv-packagcsi (aceesscxl June l.T2()lfi). 

Xtiiiity Home I'age |liitp:/Avww.xlH»i(y.coni''C«r}K>rafe/Learn.4)i.gitiil03blc.'digilalcablc.h(mi) (accessed .Itinc 1. 2016). 

• 13- 


115 


with the purchase of a bundle.^* Time Warner Cable offered free HBO, Starz, and Showtime for 12 months with a 
qualifying bundie.^"^ The practice of using introductory offers was so common that some companies provided 
customer service agents a list of different introductory offers to offer customers, based on the type of service that 
they were purchasing.^^ See Figure 4.^ 



FiGUflE <1: DiSH PROMOTfONAi. PacKAGC With ROILTO PAV PREMIUMS 


While some offers disappeared from a customer's bill once a promotion ended, others required customers to call 
their cable or satellite provider to cancel the service or be charged for subsequent months after the promotion 
ended, The practice of requiring customers to affirmatively cancel a previously free service is known as "roll-to- 
pay" pricing.^® Dish reserved "rolt-to-drop" promotions -promotions that simply disappeared from the 
customer's account - for upset or at-risk customers directed to customer service agents in the company's 


Charter Home Page {hH[w://wwAv.clKirtcr.coni'lM'«>w,<c/co!iK-ni-cli;iiiv-i-lioiiic)(.io<.'C5i«ic(l Juno (>, 20lfi). 

Time Wartur Cable, TV. Imriiei. ti Pbme flan.s (hnpsr.'Vwww.iimewanicrcahlc.etiin/conlciit/iwc/on/pians-packsigesfCiibk’- 
iii(eract..lilml/) (iicccsseci June J.l. 2016). 

D1SH-PSI20 1 5NOV.0004008S0. 

Disli Home Page (accfssc<i June 2 i. 2016}. 

Permanent Subeommittee on Invesiigations. Interview of Dish Custonwr Service officials {May 12.2016); DrV-PS[-003<.M6; DiSH- 
P.SI20i.SNOV-0004SM29; l.)TV-PS)-0045764; liitenu! Subconimitiec Analysis fTWC RTP offer I”. “Cli.rrter RITM". ''Cliaiier RTF t" 
ami “Comcast RTP.[,2’h; DTV-PSl-00122'i;'. 

DlSn-P.SI20l 5N«v-0n()4 1 5374, 


•14- 




116 


"Loyalty" division.^® Additionally, some contracts between premium programming companies and cable and 
satellite providers required that roll to pay pricing for their programming be offered as part of a promotion. If a 
cable or satellite provider did not adopt roll to pay pricing for that programming, they could face paying higher 
prices.®® 

Some cable and satellite providers were aware of the confusion that the auto renewal of introductory offers 
created. For example, DirecTV identified the auto-renewai of NFL Sunday Ticket as a major contributor to 
increased calls in 2013 from customers who did not cancel in time to receive a refund on the expensive package 
of out-of-markel National Football League games.®^ Perhaps in response to this, in 2013, DirecTV employees 
recommended that DirecTV provide customers with an online option to cancel NFL Sunday Ticket. DirecTV now 
provides customers with more notice and additional time to cancel the service, and DirecTV assured the 
Subcommittee that customers are able to cancel this service online and through the interactive voice recording 
system.®^ Similarly, promotional roll offs were among Charter's top escalated complaints in 2015 and 2016. 
Although Charter had taken steps to address lack of customer awareness regarding expiring promotional pricing, 
it continued to identify instances where customers were not provided advance notice of promotional roli offs in 
2016 .®'’ 

Additional Charges and Fees 

The prices advertised by many cable and satellite providers rarely include all charges, taxes, and fees, 
which can lead to frustration and confusion when customers receive their bill. When customers are finished 
ordering their cable or satellite service, depending on the number of televisions that they want connected to the 
service, the fees can make up over 40% of their bill before taxes.®^ Even adding one additional fee can grow a 
customer's bill substantially,®® 


Dish’s inlci'iwl documeiUs note that rolI-ti)-<lrop offers can only be made by agents inicnicting with castomers who aiv iip.sei or al risk of 
Icavint; Dish, DiSH-f*St2()|,SNov-t)t«MI,517-l, 

Senate PenTiftnc.ni Subeoinmitiec on tovo.siii’aiions. liOnvunv oppish CusKMiwr Service oiricials (May 12. ’Dlfi), 

DTV-PSl-003(lft87, 

DTV.PSl-0()37036. 

Additionally. DirecTV now caiK’ois the auto rciicwai tor customers who do not watch NFI. Siindny ticket during the season din ing 
which they received it tor tree. Senate Permanent Siibconimiitce on lnve.stigatnms. Interview of DirecTV Customer Service ofliciaLs (May 
25. 2016); Email from William Clarkson. Cviunsel for DirceTV, to Subcoinmiltiv (June 20. 2016) (“Dl'V-PSt Minority Report Rc,sponse 
Submission”); DTV-PSi-(K)M6l7 621. 

''' CHTR..MVPD-PSI-0l)0i-J755. si slide 6; CirrR-MVPl).p.5I.OOOI4779. at .slide 2; f:HTK-MVPI)-PSl-0(K)M7X‘i. at slide 2' Ci iTR- 
MVI>D-PSI-000148,3I, at Slides. 

I'or a Comcast cusloivier signing tip for the IMd ov Digital Starter proniolional package with two iclcvisioas with DVR and optional 
protection plan, fees would total over 536 (.5.3.‘)5 tor the protection plan, $9.95 for ihcar DVR wrvicc. $9.95 lor I ID Service, $9,95 for an 

- IS- 



117 


Fees couid include recurring charges for items such as programming, equipment, and high definition (HD) video. 
Others were one-time fees, such as an installation or a repair-of-service fee. Cable and satellite companies also 
included taxes and government-mandated surcharges.^^ Because these fees were so numerous and were often 
not included in promotional and advertising material,®® they could lead to confusion among consumers who did 
not understand the purpose of the fees they saw on their bill. 

The Subcommittee reviewed how cable and satellite providers set the price of fees and found that they generally 
used one of three approaches, depending on the type of fee; 





iTs’hrc •nsf-«L-«d fsrpri rfi^sn r« 'u fcinsjiH aMrpraj'a*n‘n-riCTjiii 1 Cl I, 

nine ajerj^ taia'i* .«fa^ Ft^Taii* "M’Ti i" ■ i 1 1 

II I L> 1 4. g I _i- i_.} u _|^iar«’-F*'int;„ 1 al:4f-‘ d"c p eaxw ur* ic-ra-'H.# rc’-a ’Jifj ■■ i ’ pi 

“ “-i; "r " “vyad t^waa rt ha XiWti r-BJ ’a- .a 'ti Thi ’f In «+ fa'o .« tbi •- 1 i p r iri j n t -i j 

1 1 r . r ' I- ■ f tta- I K p.ji_Ji t.a 1 1 =' 


additional 1 ID set. top lw\, S ! IM) for tlio RSN Rv, iind SI. 50 in the Broadcast TV surcharge). .SVv Xtuiity Hoiiie I’agc 
{lnip:.vW\vw,xniiily.coiiv’Cor))()raKVU-:irii.'Di|!ilalCal>kVdigila!cablc.htnin (accessed June 20. 20 U», COMCAST-l'SI-OOOi lOSO . O.-’f), 

For Maniple, if a customer suhserihini! to Comcast's Dignal Premier .Sm-ice ackled one HI) DVR to die package, over 20'i ;, of llie 
I'osiillinp S79.94 monthly ri'ciimng bill would Iv fee.s ivlatcd to that ccjuipmcni and service. XCmity Hoimi Page 
(tittp;/Avww,xrmily.oom/Corix>r.itc/lcani'l.>ii:iialCable/diijitalcHbie.hlmf)(acces.scd June .1.2illfO, SulKoimmtiec svalTercatcd this 

package online, resulting in a total monihly price eomprised of the tbilowing ■package price (S.5‘».99 |>cr twnitli); HD DVR fee (,S 10,00 

per montli); HD tcehnolosiy fee ($9,03 per month) loi an eslimateii monthiy total of S79.94, .Screcashot of Disical Premier I'V paeknye 

with upgraded MD DVR fee ear! Dune 21), 2010),. 

Cable and satellito providers ail charge eiistomers a set of legally required state and local ta.xes ;« well as other Ices, .such as Ihuidiise 
fees and legulatory fees, These fees and tuxes make up a small ponion of every customer's bill and vary state by stale, Pinail from 

Leggin. C'oiinscI for Dish, 10 SulKommittec (June 7. 2nif>)CTa.xcs .MyDish_Disli Customer .support"); O.)MC.\.ST-PSi-00()! 10.50 0'<1, 

“ See. c,y'. Dl.SH-I'SDO 1 5.NOV-()()()509.'J M <“Motiilily fec.s apply Hopper. SI .loey. .S7; Super Joey, S 1(1. All prices, (ecs. cltiii-|tcs. 
packages, progv.imming, s crsion features, fimelionaliiy and oilers subjeet to change wiilu.mt cKXice.");; I.Vl'V-PSI-007>i 142. o! sli<ie 9, 

I’einiancnt Subcominiitee on insesligaiioiis. Interview oft.'hanor l.’ustonter Service ollicials (.May .1 1 , 201 (»); I'erinanem Siilvommiltee 
on Investigation.s. Interview ot (.’oincasi Customer Service officials iJmie 3. Permanent Subcommittee on Irivesfigaiioiw. Interview 
of DirecTV Customer Service otl'icials (June 1.). 2(>!h): Perrn.aneni Subeommiitec on Investigations. Imcrvicw of Dish Customer Service 
ofticiais iTiine 9. 201h); Pcrnianem .Sul>conuniUe.e on lnvcstigaiion.s. Interview oflime Warner Cable Customer Service otticia.!s (Mav i i 
2016). 

TWCJ)r)01772.A; COMCAST-i’Si-000)377ft; CH rK-MVPD-PSJ4H'XM{»n02; OTV-PSi-i)imOI8. 


• 16- 



118 


Despite the differences in pricing, all fees and charges have the potential to cause confusion about what a 
customer will pay each month. 

Pass-Through Fees: Cable and satellite providers charged customers certain fees solely as a means of cost 
recovery. To price these fees, cable and satellite companies estimated the marginal cost of the fee to the 
company and then passed it on to customers by dividing it by the number of their subscribers. Regulatory fees are 
a classic example of a pass-through fee. Cable and satellite providers charged regulatory fees to customers in 
order to recover the cost of fees imposed on the providers by local, state, or federal regulatory authorities.^^ 
Regulatory fees can include franchise fees assessed by local franchise authorities, utility fees assessed by the 
state, and annua! fees collected by the FCC. Providers could characterize state and local taxes as regulatory fees. 
These fees appeared on a customer's bill on a monthly basis. Four of the five cable and satellite providers 
reviewed by the Subcommittee set the price of their regulatory fees in order to pass through the company's 
marginal cost to the customer, meaning that no part of the regulatory fees they charged generated profit for the 
company.’^ DirecTV only passes along taxes to the customer.^^ 

Revenue-Generating Fees and Services: The price of most fees was determined according to annual revenue 
goals set by each cable or satellite provider and what the market would bear/'^ This price structure may take cost 
into account, but cable and satellite providers focused on supply and demand, pricing, offerings of competitors, 
and revenue goals. As these fees were not pegged to the actual cost of the equipment or service they 
represented, cable and satellite providers had the flexibility to increase or decrease the fees as they chose. 


DISH-PSIO{)06590;COMC:AST-PSI-0()0110SO-051. 

D[8H-P,Si0()lifi.''90; COMt'AST-PSI-OOOl |i)M) • O.Sl. Pwmancnt Siibcoiumitfcc on Invcstigiitions, Interview ot'Cliancr Cu?itonici' 
Service otTiciuls (May 11, 2016); Pcnnimeni Siibcoimnittec on Inve.'iligaikins. Interview ot'Conieasi Customer Service otficin.l.'; (.liuu.' 1, 
20i6);Pern«ment SulH'omnime.e on invcstigatioiKs, Interview of Dish Customer Service olTicwls (June 9. 2016); Pernuuicnt Stibeoiiunitice 
on investigations, ititervicw ol'Timc Warner Cable Ciisioiner Service ofllciais (May 1 f, 2016), 

i-itiail from William Ciark.son, Counsel for Diroe'I'V, to Subconmii»ec(.lime 20, 2016) ("DTV-PSl Minority Rejwrl Response: 
Submission”), 

Permsment Siibcoininiitec on Investigations. Interview olT.'lwner Cu^^onler Service otriciais (.May ,11. 20]6); Permaiu-nt Subcomniiltee 
on I.nvestigatjons, Inlerview orComea.si Cii-siorncr .Service otTieials (June 3, 2016); Peniiaricnt SubcommitU'c on iiivcsiigations, Inlervicw 
of Dircc'J V Custoniei' Service olTici;tis (June 1.3, 2016): Permancni Subcommittee on Investigations. Interview of Customer Service 
oOicials {June 9 . 20! 6); I’ermanent Subcominiilceon lnvestig3tton.s. Interview of Time Wanicrf.'ablc ('ii.s(omcr Service ()fticj.0.s (May 1 1, 
2016), 

.Permanent Subcommittee on Invesiigaiioas. Interview of Charter Customer Service oilicials (May ^ i . 2016); Permanent Subeonimitlec 
on Investigations, Interview ol Comcixst Customer .Service otTicials (June 3. 2016); Pcinumcnt Subeommitlcc on Invest igai ions, Iiitorview 
ot DirecI V Customer Service olficials (June 13, 2016); Permanent Subcommittee on Investigations. Interview of Dish Customer Service 
oKieiais (June 9. 2016); Permanent Siibcommillce on Investigations. Interview of Time Warner Cable Customer Service officiuls (Mav 1 ! 
2016), 


- 17 - 



119 


Cable and satellite providers price a number of fees this way, including recurring fees for equipment and services, 
as well as one-time fees for services like cable installation. 

Equipment and Equipment Service Fees: Cable and satellite companies levied recurring monthiy rental charges 
for set-top boxes, digital converters, access to HD channels, DVRs, and adaptors, among other types of equipment 
required for service/'’ See Figure 5” 

To access HD channels and DVR functions, some cable and satellite providers charged service fees in addition to 
both the HD and/or DVR compatible receiver. All cable and satellite providers reviewed by the subcommittee 
charged DVR service fees.^** Additionally, Dish, Comcast, and DirecTV charged an HD fee, which averaged around 
SlO,-'”® For some providers the HD fee, which is disconnected from the cost of providing HD programming, was 
often only charged to customers who did not ask to have the fee removed. Dish agents are trained to 
immediately waive the HD fee for customers who complain about it.®*^ 


Forcxuniplc, other dwrgi’s forCouiCiist can tndiidc fees for; HilTceimology, Digital .-Vklitional Outlet Service, Digital AtkIitioiKil 
Outlet Service with DVR Service. Digitn! .Aiiditional Outlet Service with .AnyRoum DVR Service. Digital AtJ.tjitcr Aiidilioniii Outlet 
Service, ami the Sel^'ice rmteeliuo Plan. ('OMC.\ST-PSI-(>0(>I 1052; /V.vA; Fee.v (bttpsuVwww.myaisIvcoiu/suriJort/lees) faecetise^i .lime ,2. 
.2016), 

'' DTV-PS 1-009.1564; COMCAST-.PSt-OOOl 105.’; TWC\0tM)17759; Penmnem Suhconimiticc on Investigations, liifen'iew of Dish 
Customer Service olTiciais (M;ty 12. 20! 6); Mmail from Sarah {.ajggin. Counsel tor Dish, to Subcommittee (June 7, 2.016) ("Request 16 - 
Tec l„isl FINAL"); CHTR-MVPD-.PSI-tH)(D9‘)',)8. 

D1'V-PSI-009.T564: CiiTR-MVI>D-i>S)-00();i99y8; COMCAST-PSi-OOOl 1051: TWC,0()(>177I4; Htiwil Ifmn Sarah l-cggin. Counsel (or 
Dish, to .Subcommillee (.hinc 7, 2016) ("Dish Network "Requcst-to-Feeslist-Fmar'). 

Penmiicnt Subcoitiiiuttec on Investigations. Interview of Dish Customer Service officials (M.iy 12. 2016); Pemiancnl .Suhcominiitoe on 
Investigations. Interview ot (.'omeasi CusUmier Service olllcials (June .1. 2016). DireclV custonicr service ngcnl.s were iraincJ lo give 
credits to offset the HI.) lee belbre 20] 2. DTV-PSI-00.57880, at slide 5. Cable and saidlite companies with HD lees: Di.sh. Coincn.st, 
DirecTV, 

^''Permanent Siibconimittec on Invosiigations. imerviewof Dish Customer Service onicialstMiiv 12. 2016); DISn-PSI20!5Nov- 
0004.5SOS5. 


- 18 - 



120 


;; HD, DVR, and ARS FEES iN 2015^'^ 


1 TV PROVIDERS 

DVR HC 

> ARS 


' * 



COMCAST 


dlS? 


19.9582 


$10 


$9.95-10 


(CJ^Warner- 

Cabis' 

$]2,99 



Charter 

$11.99 : 

ss 



■ 

Ip AN- i 


HJ 

DIRECTV 

$10 

$10 

$15-25 


$1083 




In 2012, DirecTV, noting that that it had sometimes provided "perpetual HD credits" to customers upset by dte 
HD fee, determined it could increase revenue by consolidating equipment service For new customers, 


" ,DI\ -rSI'00:)3M)4, LOMCASI -Pbl-lKk)n053: T\VC_0b0i7719; Pemancut Sisbcoinmitwe on Investigations, Infci'viw dt'Dish 
Customer bcirvite on'tcials{M3y .12, 2016); Email from Sarah teggin. Counsel for Dish, to Snhcommiltee (June 7. 2016) {''RequesS Kv- 
loelKst^riNAl 1 t.llTR-MVPD-PSI-OOO^WS, 

^ ’.Conicaat customers with DVR service ilo not pay a separate charge for HD service a.s it is ihciuikd in their .9.6 DVR service fee. 
Permanent Siibconiniittee on investigations. Interview of Counsel for Cxtmc&si (June 22, 2016). 

'‘'.Dish,‘.f.oppCtK'htVigingnewcustomersHDfeesiniuiyof20]5.buicommitedtochargccxistingaistomersthis fee. Peraiancnt 

Siibc<mumttce on liive.sfigaliojis. Interview of Counsel for Disli (June 22, 2016). 
l>i \ -PM OO.V;880. at. slide .6: DT\M\S!-l)0.5(i4;?3, at slide 1 


-19- 





121 


DirecTV consolidated the HD and DVR fees into a single charge for "Advanced Receiver Service" (ARS), introducing 
it at $20.®^ In 2013 the fee was increased to $25.®® Today new customers are charged $15 for the ARS fee while 
existing customers whose accounts were created between February 9, 2012 and July 23, 2014 are charged $25 
per month.®’ Similarly, Comcast customers paid a combined fee for DVR service.®® Those who wished to purchase 
DVR service had the HD fee folded in to their combined fee price of $19.95.®^ Whiie this fee was combined, it 
could appear separately as HD and DVR service on a customer's bill or jointly as the HDDVR service, depending on 
the geographic area. While Comcast subscribers could not have DVR service without HD service, they could have 
HD service on its own.^° By comparison, in 2015, for services similar to those covered under DirecTV's ARS fee, 
Time Warner Cable customers paid $12.99 for DVR service. Charter customers paid $11,99 in DVR service for one 
box or 19.99 for up to four boxes, and Dish customers paid $10 or $15 for DVR service depending on the type of 
DVR they had, with some Dish customers still also paying the additional $10 HD fee,^^ 

Installation Fees: Most cable and satellite television companies charged fees related to the instailation of 
services for new customers.^^ Like DVR and equipment fees, installation and activation fees were not always 
pinned to a single cost or set of costs but were instead considered in the larger picture of overall revenue 
production and customer willingness to pay. 

These fees varied between cable and satellite providers but could also vary depending on a customer's credit. For 
example, DirecTV customers with lower credit ratings may have been required to pay a fee at the time of 
installation, sometimes totaling $300, even when advertisements claimed a "Free DirecTV System."®® This fee, 
however, was not presented to them as a fee based on their credit but as an opportunity because they "qualified" 
for an offer.®*^ Similarly, Dish customers who chose not to qualify with a credit card may have been charged a one- 


[)TV-.PS!-00578S0. at. slide; 5: DTV-l’SI-OO.SfilSO. ar slide 2: fiinail thnn Williain Clarkson, Counsel lor Diroc TV. io .Subannniitiec 
{June 20, 2016) (“DTV-PS! .Minority Rcpoil Rc.sjx'iisc Stibnii-ssioii’'). 

DTV-F'S1-0094(:;79, 

DireeTW A there a Fee hn- DVR ami HI) ,Vr’rr)i-r.« (hilps://s u[)i.i<'i ( .>lirce iv,einiVa[>|.Vaiisv-eis.'ile.i;iil/a kl.'12ii7 ) (acce.s.soi.l Jtmo 20, 2016). 

Pei'inanem Subeoniinittce on Invcstiiiaiioiis, Inimicw ofOninsct for Coiwasl {Jtitw 22, 20t6>. 

fd. 

"" Id. 

CHTR-MVPD-P.SI-l.)0l)l‘W8; COMC.AST-P.SI-OOOl lO.'S:); TWC 00017714; Email from Sarah l.cggin. Counsel for Dish, to 
Subcommittee {.lunc 7, 2016) (“Request 16 • I ce List - FIN’.AL”). 

CinR-MVPD-PS!-00040000; Dish. Fees |hiip.s:.'’.'vv'\v\v.niydish.coni^upport'f«'sl (accessed June 2. 2016); Coinca.st 2016 VVasiiinsion, 
D.C. Services and Piioni; Bill lascrf. 

DTV-P,S!-00.‘i0414; DTV-PSi-00504|6; ryrv.p.Si-0n5tl424. 

DTV-}>S[.(.)()5I)422; DTV.PSl-0030424 


-20- 



122 


time fee of $100.®^ Whiie some sateilite providers like DirecTV sometimes allowed customers to receive monthly 
credits to recuperate the cost of these fees, these payments were in $5 increments and could take up to five 
years to reimburse.'^® Other credit-based fees, like DirecTV's $99 up-front credit-based fee, were non- 
refundable.'’^ 

in addition to installation fees. Dish also charged new customers a separate "activation fee," for "non-quaiifying" 
customers based on their credit rating designed to recover the cost of onboarding a new customer.®® In the case 
of Charter, these activation and installation fees could be confusing to customers because their description was 
sometimes included in the fine print of their agreement.®® 

Protection Plans: Almost ali cable and satellite television providers had a "protection plan" or service plan, which 
were fees assessed for an optional service that customers could purchase.^”® Protection plans were similar to 
insurance in that they covered certain repair charges that occurred in the event of service or equipment failure. 
For example, if a Comcast customer without a Comcast Service Protection Plan needed an in-home service call, 
the customer would have been charged $37.15 for a service call, or "truck roil," to fix the issue, if the customer 
had the protection plan, the customer would have been charged nothing for the service call, but would have been 
paying the $5.95 monthly protection fee.’°^ 

Many customers may not need their protection plans. After a television provider set up service in a customer's 
household, the company typically made few additional service calls.^*^ In fact, for some television providers, only 
a small percentage of customers ever needed service calls. 

Protection plans were so valuable to Dish that it instructed its agents not to remove them when trying to 
accommodate customer requests' to lower the monthly bill.’® DirecTV customer service agents were instructed 


"^DIS[M’S120!5.Nov-0()04(Wk7S, 


.DTV-PSI-()D.512.^S. 

DlSH-PSi2015.Nov-00(.)4!44t,S; 1‘cnmncnt SiiKuMnmiilccoii Invc-s^igiilions, Interview of CouikcI fur Di.sii<,fvinc 22. .’Olft). 

"" CH'fR.MV['D-PSI-00()003(>l, 

Dish, DirecTV. Comcysi, Time Warner Cable, and Cluirler all had some form of this optional sorviec. Charter and Comcast's plans 
spcciftcaliy covered problems associated with a subscriber's home wiring. 

Comcast 20 1 (> Wasliington, D,C. Servicc.s and Pricing Bill Insert. 

/(/, 


"" .Senate .Permanem Subcoimnittee on lnvv.stigatk)ns. Interview of Dish Customer Service oHicial.s (May 12. 2016), 
/</, 


•21 - 



123 


that the protection pian must be offered with every sa!e.^°® Dish, on the other hand, offered their protection plan 
as a free or reduced-price promotion that would "roll-to-pay" if the customer failed to cancel before their 
promotion ended/'’’ 

Programming Fees: Programming fees were charged byfour of the five cable and satellite providers reviewed by 
the Subcommittee, Historically, the costs of programming were included in the price of a customer's package. 
Over the past five years, however, cable and satellite providers began creating new line items on their bill for 
broadcast and sports programming in order to charge customers for it in a way that did not affect the base price 
of their programming packages,^®* Programming fees did not recover the entire cost of the programming 
provided but attempted to recover a portion of increased programming costs.^*® 

Charter, Comcast, and Time Warner Cable chatted a "Broadcast TV Surcharge" or similar broadcast 
retransmission fee, and Comcast, Time Warner Cable, and DirecTV charged a "Regional Sports Network" (RSN) 
fee.”” The broadcast retransmission fee and RSN fee may have appeared to be cost pass-throughs, but they were 
not. They were a portion of programming costs that providers chose to characterize as fees. Broadcast 
retransmission fees reflected the cost to the cable company of carrying local broadcasters such as ABC, CBS, and 
NBC.”'- RSN fees applied to customers with packages that included regional sports networks such as Fox Sports 
Midwest and Sports Time Ohio.”^ 

Cable and satellite providers began implementing these fees around 2012, starting them out at relatively low 
rates such as $1.35 (Charter) per month fora broadcast retransmission fee or $3,00 (DirecTV) for a RSN fee.^^^ 


Ivmail IVoni Saviili [...eg;uin, (.'nunscl I'w Dish, lo S\ihvonimti(cc (Jtmc 7, 20i{>j {•■Roqucsl I ft- I'ce List - • i'lNAl.’'); DISM-l’SI- 
()004015ft3, 

DISH-PS110i5Nov- OOOIWMI. 

COMCAST-I’Si'OOO 1 567r); Sulxioinmiticc on Invosligalions. Iniervicw ol'Clwflcr C(istot!K.'r .‘^ctvicc ol'liciuls tMay i . 20 U>). Oik; of 
the reasons that Direc ! V cli<l noi iiielnde their KSN Hv in Ihcir package prite is that it woiikl have itiiidc it more dii'dculi lo vary the I'w 
grograpliiciiily, I’crniifiicnt SiihcornttHllev on liivcsrij!aliv)ns. Interview ol'DirecTV Ciislomcr Service or'licinls (June I T 2(t!6). 

CRTR-MVPD-PSI-l)(KM0d(>2; DiV-PSI-dOWOIS; fi)nicusi-P.Si-W)l3776; t'VVC (>(»<)I772.«, 

"" CHTR-MVPD.PSJ-00040002; C'OMC.AST-PSI-flOOl 1052; COMCAST-PSUKhh |(15.V TWC.O()OI(W55: DTV-i‘Si-OOO.t5(-;4. 
‘"Charter. {hvi|r.‘.Vww.clwrter.nel.’siip|K>il’niy-accounoVo3dcas{-iv-surcharaw| (acce.ssed June 2 ti, 201 (i), 

"• Direel V. /..oail Rogiomi/ W’liyDrl, hi/vnntiliuii 

i'!l.ilni..:.w>>->y..v!.l!v.vJ.y. n.njvJ.>L\.,:.\r!.*;'ltl.tLh.i,d 4 !iincijmj!jlPp^^^^ spo rts ioo kiin) (accessesl June 2lV :?OU>t 

‘ ‘ ' CHTR-M VPD-P,Sl-(Jl.l040<)02; D rV-PSI-O00,J5M. 


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124 


Today some of these fees have increased substantiaiiv, with broadcast retransmission fees costing as much as 
$6.05 (Charter) and RSN fees as high as $5.64(DirecTV)/^^ See Figure 6.^^ 

This chart reflects the total of any RSN fee and any Broadcast TV Fee (or "retransmission fee”) imposed by each 
provider from 2011 to 2015. Not ail providers charged both fees. Dish did not charge either a RSN fee ora 
broadcast fee from 2011 to 2015. The Subcommittee requested that each company provide the amount charged 
for each fee during the years in question, in cases where the company provided a range (e.g. Comcast's Broadcast 
fee in 2014 ranged from $0,40 - $1,50) the chart reflects the midpoint of that range ($0.95 for Comcast in 2014). 

RSN and broadcast retransmission fees are particularly irksome to customers .because they are often unavoidable. 
When cable and satellite providers charge broadcast retransmission fees, these fees are charged to all customers 
in all packages.^ ^® RSN fees on the other hand, can vary from region to region because not every geographic 

FiGUR;: 6: ]MCR£ASI?J6 RSN AAiD BROADCAST FEES 



market has an RSN, and DirecTV allowed customers to avoid RSN fees by choosing non-sports packages. 

However, if customers with Comcast, DirecTV, or Time Warner Cable lived in a region where their provider carried 


* *•* Cl'!T'R-MVP[>-!>Si-00040()02; Dlrt'-rSI-OOR-lSM. 

CHl'R-MV!>D-P.SI-0OH)()i>?.; DlA'-f’Sl-OWl.SM: COMCAST-PSI-OOdl 1052-05.1; CcHer I'roni M.ii:iiaci I), ('oiisise! tor Timt’. 
Warner Cahtc, lo Chairman Pomnan and Rankins Member McCaskill, aUachnwnt (June 7, 2016). 

' Permanent Siihcommillce oti fnvestigaiians. Interview of Comcast Cu.«omer Service ofriciai.s {.hmc .1, 2016); TWC:.p000067it; Ctiiivtev, 
My Acamnt - Bnmkast TV Sun-hat-ae (htip;//www.charler.nct/siippoit4riy-accou]jt/broac!cast-t\-siircIiarguV) (accessed .Inne. 20, 20 1 6) ; 
Pennanent Subcominitice on Investigations, Intm-'icw of Charter Customer Service officials (May 1 1 . 20 1 6). 

Some standard package, s were not charged RSN fees, and some custotners may have chosen t<' downgrade to packages liiai did not 
iiteivide sports prograntmittg. DTV-P.SI-0056052. at slide 2. DirecTV offers four different base packages that are not subieet to RSN fee;;. 

-23- 




125 


a regional sports network, they iikety paid an RSN fee because RSN fees apply to the majority of popular service 
plans. 

Most cable and satellite providers Justified these fees by pointing to the increasing costs they faced for carrying 
broadcast and live sports programming.^^^ By creating new, separate line items, they claimed to "more accurately 
communicate the escalating fees" that cabie and satellite providers paid for sports and local programming in a 
way that did not impact the price that they advertised for cable service.^^® Multiple consumer advocacy groups 
and local regulators raised concerns about cabie and satellite providers' practice of adding fees for programming 
already included in the package, with one stating that if the fee was unavoidable, it should have been rolled into 
the package price , See Figure 7. 


Some standard packages were not cliaiiied RSN Tel’s, and some ciwuinwrs may liave tlio.sen to dovviigrade to packages tliat did noi 
include sports programming. DTV-l’SI-0i»560.S2. at .stkio2. IlinvTV oflcrs lour different hase iwckag.cs llwl arc ni'l .subject to RSN Ices, 
fimail from William Clark.son, Counsel for DirecTV, lo Suhcoimiiillcc (June 21). 2(1IA1 (“OTV-PSt Mimiriiy Re|.oi t Rc.ipoii.se 
.Si.ibnii.ssion"k Permanent Stibcominitlecon Investigations. Interview of Conicasl Customer Service odicial.s (June .T 20)6), 

l.)TV-PSi-0056().S2, at slide 2; TWt: ()0(»lf)79.V. C(.)MCA.ST-r.SI-0()()l',(i79, 

Senate Pentiiincni SiilKimimiiicc oti investigations. Inimknv of DirecTV Cusioirwr Service ohkialsdnnc T.k 20101; Semilc I’crmancm 
Siibcommiitcc on iiivc.sligations. Interview of Time Warner Cable Customer Service ohiciais (May 1 1. 2016>. 

It is worib noting that the prices c,al>ic ami .satclliic providers paid Ibr other types of programming increa.scd as icel), but lelcvisioii 
providers did not cicalc sepinatc charges Ibv those- networks, as of yet. 1 WC (WiHi79,l; r)TV-l'SI-t)0S,l!n3. at slide 7; r)IS]l-TSiOOO?746; 
CO.MCAST-rSI-00()1367<> ("Comcast retransmission fees will have grown 6.S% from 201 » to 20I4."). Cusimner service reprcscniiuivcs 
were inslruetcd to use the Sports Programming Pee us call atteniion lo the rising cost of si>orlK pmgramming i'WC 000009!l.‘i. 

.Senate Permanent Subcommittee on Investigations. Interview of Alice Lawson (.April 5, 2iH(>). Senate Permanent Subcommittee on 
Investigations, Interview of Matt Wood (Maixli 9. 2016); Senate PermanenI Subcommittee, on Investigations. Interview of. Iodic Miller 
(April 7, lioift); .Senate Permaneni Siibcommillec on InvcKtigatioiis, Interview of Mitsuko lien era (April 1,2016); Scniiie Perniancnt 
.Subcommittee or Investigations. Interview ofCoralic Wiisun (April id. 2016). 


- 24 - 



126 


Figure 7: Introduchon of RSN and Broadcast Fees'^^ 


TVPROVIDERS 2011 2012 7 2013 2014 2015 ^s>S$3. 20U | 


■ 

:.T ■■ 

iw-. 


COMCAST 



y 

yy yy 

V. Cable' 



y 

yy '/y 

Charter 

\/ \/ 

y 

sf 

y y 


SaIHLITE CO.fv^PAi^lES 

ii 




y 

y 

y 

y y 

DIRECTV 

>/= RSN Fee'®'* 

1 ■ 

y=s RETRANSMISSION/BROADC^SriEB^ 




Despite arguing that these fees were for programming costs alone, some cable and satellite providers grouped 
both of these fees on the bill alongside taxes, fees and regulatory charges, which may have incorrectly suggested 
to the subscriber that the cable or satellite provider was required by the government to impose these charges. 

For example, Charter grouped its "Broadcast TV Surcharge" with "Fees and charges" which included regulatory 
fees like the "FCC Admin Fee" and the franchise fee. Comcast did not place its broadcast TV fee and RSN fee in the 


CHTR-.MVPD-PSf-OO'fOOOS: Lcttor tron» Brian A. Benczkowski, Counsel for Charier, to (''Iiiiinnan I’ortnian and Ranking Meirihai' 
McDtskiil {June 14. 2016): DTV-l’.Si-l)0935M: COMC.AST-PSl-OOOUOSa-OSl; Letter from Michael D. Bopp. Counsc! for Time Warner 
Cable, to Chairman Porlman and Ranking Member McCaskili, atiachment (June 7, 2016). 

TWC., 000 1079.1; COMC.A.ST-PSI-00() 1.1678, at slide 5; DT\’-,PSJ-00S6052. at slide 8; DTV-PSi-0002!21, 


- 25 - 



127 


taxes and fees section but rather placed them in a section called "Other Charges & Credits" which included other 
charges like "Regulatory Recovery Fees." Time Warner Cable grouped its broadcast TV fee in a section called 
"Taxes Fees &. Surcharges,” and DirecTV grouped its RSN fee in a section called "Other Charges, .Adjustments, and 
Taxes."^^*’ 

Price Increases 

Since 2010, the price of cable and satellite service increased at fourtimes the rate of inflation. in 
addition to seeing the price of service increasing, many customers saw their bills increase through the advent 
of new fees such as the broadcast TV fee and Regional Sports Network fee.^^^ Aside from being frustrated by the 
price of their service increasing, customers felt that they were not adequately informed when and why prices 
increased. 


{ 


I think 
good deal, 


it's expensive and it’s a hassle 


when there's a problem. The price goes up and it is not a 


- COMCAST SUBSCRIBER’29 

increasing the Cost of Service Packages: The most direct way that cable and satellite providers increased 
prices was to increase the package rate. While package price increases eventually affected all customers, they 
were generally not applied to customers who were on promotional pricing until after that promotion ended. 


'^■*CHTR-MVrD-i>Sl-()00(>(.)l)02;CO\1CAS-r-!*,‘;!-(.)0()il0‘)6; DTV-P.Sl-0002121; TWCJIWKKKvV). 

Aiicia Adamozyk, Cahh: hU-%“<Air Risiiii-iit •! Tima ihe Rate nj hifiulion, I'lMKireb, 17. 2(M6) (online at 
[itlp://liine.coni/nioney,''4227LV3/Vabli;‘-imcc-toiif-tinx:s-inJliHi(>n.-); FFJ?i:RALC<JMMUMCATioN5 0)MMtssioN. Report, on Cnhh- hxlnsiry 
Prices (May 1 6, 20 11) (online at hitpi>r/-iions.tVc.anv.''cikH:s mi blkOm a cImmlvI vnA-M-nV.T-M .skU'i. The price of pf 0 !;t:'inninin,t! rose at .rale 
higlicr tlian the incrca.sc of retail cable rates over Ihc .same penoJ. LoKcr Iront KcginaUI .t. blown, OHi!i.$<fl tor Comcast, to (..'iuiiriiian 
rortman and ilniikiiig Member McCaskill (June M>. 20tfi). 

The price oi'-'Anierica's Top 120” inciva.scd from S14.9‘; in 201 1 In S59.W in 2015. DI.SH-I'.SI2015N(.v-00(Mf.(i7!<S, Utter from 
Eleanor J, Hill, Counsel for DiiwTV, to (.‘Iminoaii I’ormwn ami Kaiiking Member McCaskill (.(tine 1 . 1, 2016)'. l.cUer froiii Rcjjivuilit ,1. 
.Brown, Coimse! tor C'oiucu.si. to Cluiirman Poiiman ami Ranking Meml'or McCaskill (June 1.*. 2010); l.o-ttcr from Michael D. Bopp. 
Counsei for Time Warner Cable, to Chaimum Portiiian ami Ranking Member McCaskill (Jimo 16, 2016); l.cttcr from Brian A. 
Benezkowskt, Counsel tor Charter, to Chainuan I’ovlmon ami Ranking Member Mvf.'askill (June 14. 2016). 

C(JMCAST-P.SI-0001 1052 •• COMC,A.ST-PSl-000i 1053; CHTR-MVPD-l*.Sl-(K).Hi(X)2. 

DTV-PSi-0()73«0y. 

COMCAST-PSI-00012215. at .slide 42. This complaint, like others ptovided. is an cximiplo of one customer’s experience, and is not 
inlended to be represenurtive of all customers. 

' ‘['hose ill price lock ipiarimlec wei-e not .ilTectcd hy increase except Ibr tlic bro.-Klcast siircliarpc. (.'HTR-M VI’D-R.SI-OOOl .5 1 HI. 


■26- 



128 


When cable and satellite providers decided to increase prices across all of their customers, they sometimes 
applied credits to the accounts of customers with promotional pricing to defray the cost of the increase. 



ficuRE 8: Average Package Price Increases”^ 


D1SH-PSJ20 i 5Nov-0004<>l>8}9. 

Prices rellcctcci the average nionihly price of each provitler’s three most popular tclc\'isio!i jwckages. This chart not ac('on!rt for 
(he number of customei's who purctnusetj each package in a given year, nsc three most popular television packages oiiciovl bv Di-.h, rinn.’; 
W.arn<ir Cable, and C:omcast. respectively, were the same each «ar irom 2013 to 2015. DirecTV’s three imist popular fctevision piic.l<ages 
were not the same each year. 3u>r consiKtency, wc used the three padages that were the tmjsi popular in 20i 5 ('•( ’hoice ” '’(’fioicc 
Ultimate;, and Select ) throughout (ie. the 201 i. 2012, 2013. and 203'1 prices of “Choice,” ’Tdioioe l.ntiniate,” and “Stleci’) “Chartec 
moved from a predomimmtiy ‘a la carte’ legacy pricing n-Kxie! to ’all-in' or New Packaging and Pricing (NPPi in 2012, Under legacy 
pricing, C.harte.f otTered three tiers ot seiwice, but otVered customers premium or ‘add-on' services to purchase on an a la carte basis.” In its 
new packaging, many premium .seivices were now included in (he Silver or (5old tiers. Some Chmler ciisionicrs were still on packages (hat 

-27- 




129 


Within one satellite provider, increases in video package pricing could vary from package to package each year. 
For example. Dish's 2013 price increase resulted in a 20% increase in the price of some packages, while other 
packages increased by 7.1%.^^^ Between 2011 and 2015, Dish increased all of its most popular packages between 
21% and 33%, a $15 increase in the case of their "America's Top 200" package.^^'' DirecTV increased prices 
between 16% and 25% during this same period. Cable providers Comcast and Time Warner Cable had an 
average increase of almost 9% across each of their packages.^^® See Figure 8. 

Knowing that price increases raised the probability that customers would leave for another cable or satellite 
provider,^^’ many cable and satellite providers tried to time price increases in a way that would not increase 
customer dissatisfaction. While some cable and satellite providers favored multiple small increases over a period 
of time, such as limiting "the maximum increase at any one time to about $5," others increased prices less often, 
with larger impacts. Overall, most cable and satellite providers weighed the timing and presentation of a price 
increase carefully because it affected the amount that they could raise prices without upsetting customers, 

Some cable and satellite providers timed price increases with promotions or gifts to offset anger over price 
increases. For example, both Dish and DirecTV timed price increases with "thank you" gift promotions, such as 
free movies. In 2009, Dish provided instant credits to customers by instantly crediting them with $5 to relieve 


were <1 p;.irt of (lie |5re-20l2 pricing sirutegy. Inu lliese packages were no longer ottercU l<> new cu.siomers. i’rc-2<)i2 packaging inclnJcU 
Basic (J24,99 in 20 1 1 }, rxpam!e<i Basic (S5r> in 201 i), anil Oigitai Home ($63.99 in 20i f (. In 20(,S, the new pi icing inokitled .Select 
($S9,99 in 201 5), Silver (S79, 99 in 20l.>). aiKl UoUl {$'.>'>.99 in 2015). (.eller from Michael D, Hopp. Counsel fur Time Warner Cahle, to 
Clisiinmn [’oilman arid Ranking Member McCa-skill (June 16,2016); Letter from Brian A. Bcnezkluv^ki, Counsel for Cltarter, to Chairman 
Portman and Ranking Member McC.'askiil {.lunc 14, 2016); Letter from Eleanor J. Hill, Counsel for DirecTV, to (.’hairman 1‘urUiian and 
R.inking Meinbor McCasktIi (June 13, 20! 6); I.etior I'mm Reginald .1, Brown. Counsel for Ccmcast. to Chairman I’oitinaii and Ranking 
Member McCaskili (June i L 2016); DlSH-i’SI-l«)i)4o!)78.S. 

DiS'H-PS120l5Nov-00(M6078S. 

DlSH-PSi-00046078R, 

Letter from Eleanor, I, Mill. Counsel foi DirecTV, to Chairman Pomnanaml Ranking Member McCaskili (June i3, 2016), 

Letter from Reginald J, Brown. Counsel lor Comcast, to (.'liiiimian Portman and Ranking Member McCaskili (.iune 1,1. 2016); Letter 
from Michael D, Bopp. Coim.vel for Time Warner Cable, loCliairmun Portman and Ranking Member McCaskili (Ji.me 16, 2016). While 
this increase is less promiiumt than lor the other providers, it is worili noting that Time Warner Cable and Cornea, st have both RSN and 
broadcast rctransmis.sioii fees. COMCAS'l'-P.Sl-OtK»n052 -1)53; TWC (10017723. Comcast has also lowered the price of Ms Limited 
Ba,sic package since 20! ! and ita.s providc<l moa- HD channels and Ihsicr mtemet sjwds. letter from Reginald l.lr<>wn. Counsel for 
Comcasi, to Chairman Porlttum and Ranking Member McCaskili {June l'A2(tl6). 

Sci\ e.g, DTV-PS1-0O85376. 

C:OMCAST-P,Sl-()00.l 26.52; .DI.SI I-P.SI20l5Nov.Ot,)0470333. at slide 2 1. 

’ ” DI V-P.S.(-0075I27; DI.SH-PSI-0()0‘I70.3.33 (“By phasing increases throughotiKiiffcrem points in 2013, wc limit the maximum increase 
at any one point m time to about S5. the amount deemed manageable by the Retention team.”). 

DISi-I-PSi2{)15Nov-0004('0/9I; DI.SH -PSi2(li5N'<iv-{K)046ft81 i. In the ease of Direc'fV, (he.se promotional gifts weiv a lesl to gauge 
consumer l eaction, and the practice was not conimoed. i>TV-P.Sl-(M)84('i8l. 


- 28 - 



130 


the impact of an S 8 -SIO price increase.^'®- Some teievision providers also mitigated increases through credits or 
multiple small increases throughout the year, For example, Dish increased the cost of one service by $15 over the 
course of a year, but did so in three $5 increments.^'^^ Finally, when price increases were high, the strategy that 
some television providers employed was to remove other fees to make the increase more palatable.^'’^ For 
example, in 2013, Dish told customers that because they were making "moderate" changes to the "America's Top 
120+" subscription, the new price would be $59.99. This was followed by the clarification that "[ijn an effort to 
reduce the impact of this increase," Dish would be waiving a $5 TV fee to decrease the price increase to only 
$5.^'’'^ In some cases these strategies were weighed against the potential revenue created by any price 
increase, While these tactics created temporary relief for customers, they also led to increased frustration 
when the promotional rate, credit, or "gift" disappeared.^^® 

Lack of Transparency about Price Increases: Many customers did not believe that they received timely, 
accurate, or correct information regarding increases in price. While the providers generally disclosed to new 
customers that prices "may" change, this caveat was often overlooked by customers who were provided a 
standard rate that they expected to pay when their promotion ends.^'*^ In addition, in some cases, equipment and 
other fees increased as part of company-wide price increases if they were not included in the customer's 
promotional package. 

Before a price increase took place, customers generally received notification on the back of their monthly bill or 
enclosed in the same envelope. At least four states now require that cable and satellite providers provide 30 


DISH -PSI2015N<n’-00(14(iOXI‘). 

DlSll-i'S.120i5Nov-r>()0470,T?3. 

Cu,sfomoi' service! reprosenlntives were inslniolwl u> waive ilic Progminminj- Change Tee for any cusnmier who iiiinle a chiingo as a 
result ofincrease, DISH-P.Sl’«l5Nov-0(1(M02*)7.s. 

DISH.P,Si20l5Nc»v-00(M6()8l2. 

DlSll-.PS!20!5Nov-000460Sl(>: DlSH-PSI20!5Ni>v-00(Vl6t)XI7: i)ISH-PS120l.<INov-(«KMh0.Sl8, 

'‘Wojust liave to balance •aworettcs.s' with churn, ba-ausc those that were more aware, chunicd ala imtch higher rate. reKaniless ofliow 
Ithcyj Ibvind nut.” DrV-P,SJ-{K)77.U8 • • ISO. 

DISH-PvS120LSNov.00039s>6.40; TWr_(«)OOi2‘)2. 

Permanert Stibcommiliee on Investig.'iitoas. Inteiview ofCh-irtcr billing offieiais (May 1 1 . 2016), 

i'"’ DISH-PSI2(.)i5NOVAia(>4(i2920;DJ.Sil-PSr2U1.1N(>v-i.)fJ(i402991-992. DJSII-rS!20J5N«v-00-l6l02fl; Perawnem Suheommittoe ot, 
lnvcstig.itions. Interview of Charter Cvisiomcr Service ollictals(Ma\ 31. 20)6); TWe OOOI0798-7')9- CUTR-MVPD-PSI- 0 CKi!, 5 iS 4 - 

DTV-P.SI-00751S4, 


• 29 - 



131 


days advance notice of a price increase,^^® while other states without such regulations have some satellite 
customers receiving less notice that their prices wilt increase.^^^ 

Additionatiy, although cable providers gave notice to ail customers of upcoming price increases, these 
communications were not necessarily effective in making subscribers aware that their bill would increase. A 2013 
interna! DirecTV study found that the provider's notices were only effective at alerting 16% of subscribers that 
prices would increase. In 2013, Comcast identified problems with the effectiveness of its efforts to inform 
consumers of upcoming rate increases, including that rate adjustments were only provided on the paper or PDF 
form of the bill, and were not posted on the front page of the bill or online account. In addition, training 
documents from Time Warner Cable showed that consumers seemed to be surprised by price increases. 

In 2013, DirecTV conducted a "price increase awareness test" on a select number of subscribers. DirecTV varied 
the amount and type of notification among this group, who at the time received notification of price increases via 
an insert in their bill or a message in their e-bill. DirecTV provided "high aware" notification to some customers by 
sending bill enclosures and multiple emails; other "low aware" customers received notification on the second 
page of a bill. DirecTV measured the effect of the notification on whether customers left the company. DirecTV 
found that subscribers who were aware of the price increase canceled their service at higher rates than those 
who were not aware of the price increase.^^^ On the other hand, it found that customers who were made aware 
of price increases through notification had higher satisfaction scores than customers who discovered the price 
increase on the However, subsequent DirecTV price awareness testing showed that some "high aware" 

notifications resulted in a lower NPS score or did not result in a material difference, and that higher levels of 
awareness did not always result in higher rates of cancellation of service.*^’' DirecTV chose not to adopt any of the 
tested higher or lower aware price awareness techniques among its general subscriber base.^^® In interviews, 
DirecTV stated that It made this choice was because there was no significant difference in how effective the "high 


Stales wiiii .todays advance notice: CaJil'ornia, Illinois. Ohio. and Wisconsin. DI.SIT-PSI20i.SNov-(HK)d02‘)71 
D1SH-PSI2015NOV-0()«41>29‘>1. 

DTV-PSI.006W16. at slide 12. 

COMCAST-PSl-()0()!26.5.V Similarly, a local regulator noted tlvai (he disclosure of fee incro!tse.s on the PDl' version of die bill inciint 
(hat cnsioiners must click llirougli several posies lo .sec the notice. PeniMm-nt Subcommittee on Investigations, Interview of Coralic Wilson, 
Nouii Siiburhaii Cummimications Cr>m(nis.sion | Apr. I>l, 2IUA). 

'''* “I wasn't notilied of price increase!" TWC’„i)00077t).'!.. 

D1 V-P.SI-b6616, at slides l.t - 14, •‘We just have to balance ‘aw-arcnc-ss’ with chum, bccatisc those that were more nware. diiirned ai a 
much higher rate, reganiless ofhiw (they] found out." l)'lV-l‘S|.Ot)77378 - .t80, 

DTV-PSi-6(x3t6, at slide 20. 

'^M.)TV-P,SI-007()2d7, 

Permanent Subcominiltee on {nve.stigaiions. Interview of DirecTV billing ofiicials (May 2S. 20ib). 


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132 


aware" and "tow aware" communications were in notifying the customer of the price increase and that the ’'high 
aware" communications were substantially more expensive. After these price awareness tests, DirecTV focused 
on altering the language of the notification to highlight the reasons for the price increase and made changes to 
the bill itself to more prominently highlight price increases.^®” See Figure 9. 

FfGUKF: 9: DiREClV Pact AWWRtNtSSTesriNG^®’- 



Few subscribers reported a positive experience when calling their cable or satellite company, Customers 
with a recent interaction with Comcast, for example, were actually more likely to be dissatisfied than customers 
who had not been in contact with the company. Satisfaction with customer service on the phone was lower 
than other methods of interacting with Charter, such as at a local office or with a technician visit at the home.^^^ 
When DirecTV surveyed its own technicians about the most frustrating customer experiences {because its 
technicians are the only empioyees who physicaiiy meet customers), nearly one-quarter of the responses were 


pennaneril Suhcammittec on InvesUgafions, Interview of DirecTV marketing officials <Moy 25, 201(>), 

Peimniieni' Svibcominiltce rm Investig-atioiis, intewiew of DirecTV billing otTicials (May 25. 2016); Permanonf. Snbcomniiitec on. 
Invostigatioirs, Interview of DirecTV billing otlicials (June 13,2016). 

nii reftt's to Inisiaess as usual, or the typical ptaciice ofttotityingcustomensofa price increase. Penmnent Siibconimittce on 

Investigations. Interview ot'DirccTV billing oflictaLs (May 25. 2016); DTV-PSJ-000666t6, at sii<,lc.s 1 .1-14, 

'''’COMCA.ST-PSI..OO()12933.. 

C.HTR-MVPD-.1’$I-0!)014721. 

-31 - 




133 


about problems with the "call center experience."^®^ 


{ 


it took a month to get someone to set 
We get fees that we shouldn't have, but 


customer service. 


. It's over-priced. Half the time, our service goes out. 


\we just pay them so we don't hove to deal with 


- COMCAST SUBSCRIBER'^ 


Based on reviews of company complaint and customer satisfaction data, customers often contacted their cable 
and satellite providers to address a number of issues, with some of the most common reasons centered around 
billing, technical service or repair issues, and questions about their service and contract, Customers were 
frequently dissatisfied with their providers' failure to resolve the problem or issue about which the customer 
called. Customers were frustrated by repeated transfers to different agents and the need to cal! back after their 
provider claimed that their problem was resolved. 

Even though customers may have called in with problems or questions, cable and satellite providers treated most 
of these calls as an opportunity to increase profits and sell more services. Customers who called in with a 
question about their service or bill encountered agents who were trained to take control of the call and "upsell" 
the customer. Those customers who called in to cancel their service were transferred from a frontline customer 
service agent to a specialized "retention" agent. As the name suggests, a key job (and pay incentive) for these 
agents was not necessarily to disconnect customers, but to retain or "save" as many customers as possible. 

Rather than immediately process disconnection requests, these agents would "probe" customers for why they 
wanted to cancel and then attempted to persuade customers to continue their subscriptions, 

Customer Service Agents Aren't Helping the Customer 

When cable or satellite subscribers had a problem with their service, an issue with their equipment, or a 
question about their bill, they called the customer service phone number associated with their provider. White 
some information could be accessed through an automated system, callers frequently spoke with a customer 
service agent in order to resolve their problems. 


slides 2. M.and 16. 

C:O.MCAST-i’, SI-00012234, 

‘“COMCAST-PSl-OODI2i 75: DISH-!’SI(H)0255‘>- 57.3: DTV'-P.Sf-0008463- 468; CHTR-MVPD-PSI-000 1474 i;TWC: 00017617, 


• 32 - 



134 


Unfortunately, cable and satellite providers often did not resolve these problems as quickly as many customers 
would have liked. In December 2015, for instance, 40%of a sample of customers who called Comcast with a 
billing problem were unable to resolve it on the first In December 2014, DirecTV found that 36% of callers 

contacting the billing department were unable to fully resolve their issue. Charter noted that approximately 
20% of callers were not able to solve their problem on the first call.^^^Time Warner Cable did not track the 
resolution of individual calls, but stated that it evaluated its customer service agents on whether a customer they 
spoke with called again within three days of the initial call.*^° However, based on 2015 customer survey data 
provided by the company, only 42% of customers agreed that Time Warner Cable "has the ability to resolve your 
problem on the first call."’^'' 


I was hung up on four different calls when asking the rep.. .to assist me with my billing 
problems because ! was being double billed. ..They would not help me, they would just 
hang up on me. ..they were ail laughing in the background. They would not give me a 
supervisor, nor offer me any a dditional help. Just hung up on me when they were 
ailegediy trying to transfer 


hanging up on me. 


- COMCAST SUBSCRiBER’^2 


Ironically, many of the problems that at least one cable prouder was asked to resolve may have been caused by 
that provider in the first place. Comcast conducted an investigation into escalated complaints among customers 
who felt that they were charged a different price than what they were promised. The investigation determined 
that approximately 30% of the customers reported they were not quoted the full or correct package price, and in 
approximately 8% of cases, the customer reported that Comcast applied the incorrect rate code to the 
account, At Dish, agents had a tool to report instances of customer problems for particular categories, such as 


’”COMCAST-PSl-()0()i:94!. 

DTV-PSl-()09;i809, 

"'H:MTR-MVPD-rSt-(.K)0!47.'>‘.), 

' Leiicr from Miduiol D, Bopp, Cojinscl for Time Warner Cable, to Ctiaiiinan I'oiliiian and Ranking Mciriber McC'iiskill (Mav 27. 2016) 

■ ■' .l:iasccl on Q3 20 1 5 data, TWC-WIO 1 7.S()9, 

COMCAST-PSf-000 12422. Tins quote and other qiiotc-s from Comcast cu.slomcr complaints were presented to (,‘omcasl's executives as 
example.? ol' customer complaints. C,'«>rncasl asldilKinally slated that (hc.se quotc-s were collected as pait of an attempt to improve ciislomcr 
serviee. Letter (rom RcgitiaUI i. Brown. Coiin-sel for Comcast, to Chairman I’ortman and Ranking Member McCtiskil! (June ! 8, 20.1 iS), 

f.k)MCA.S f-l’Si-OOO! ,3400. 'Iliis investigaiion octuned in 2013. Comcast conducted similar investigations over tlio previous year with 
similar results, COMCA,ST-I’.St-00()l 3213; COMCAST-P.Sl-0001. 3218; COMCASr-PSI-0001322,3; COMCAST-I‘SI-00()1322S; 
CO.MCA.ST-F'.Sl-OOO i 32.12 . Comcrt.sl described one such inve.stigalion: “The invesligatioti t/f/crmmtv/ 31% of the customers were not 

-33- 


135 


technical problems or high prices. The combined instancesof customers complaining they were given wrong 
information would make it the second largest category on the iist.^^'’ 

The reasons that cable and satellite companies have such a bad reputation for customer service are familiar to 
many consumers. As discussed below, some customers who called seeking a quick fix found themselves 
transferred from one agent to another, explaining their problem repeatedly. Sometimes, customers not only had 
to speak to more than one agent, but had to call more than one (or two or three) times to resolve their issues. 

Calls Are Often Transferred to the Wrong Agent: One of the most frustrating experiences for customers was 
being unable to contact a company agent who could resolve their issue. Customers would call in to an agent, who 
in turn transferred the call and the issue to another agent, who may have transferred the cal! to another agent, 
and so on.^'® Sometimes there were legitimate reasons for transfers, but in many cases it became clear to the 
customer that the number of transfers were unnecessary, and often mistaken. Cable and satellite provider 
documents make clear that this was not anecdotal. Dish stated that between 10-15% of its calls need to be 
transferred from one agent to another, and that 5% of its transferred calls were mishandled or invalid. 


quoted the full or corivct pfickage price, lliis is mointy <liic to the failure to c.Kpiain equipment ciiargcs, ta.xcs. activatioii fees, insMlIalion 
charges and otlier one-lime did not »n(lei>iimd package pricing and ilic bill wus coircet. Customer did not. iiiKlei'.staiKl 

(Prorates. Bundled Rale, cie), Aiioiher were due to the iiicorrcu rare code betiig added u- the cuslomer’s iiccouiit," COMCAS'l'-PSl- 
00011400. Comcast also stated that this informaiion was Irom a Jitniied titnc jwlwl beitw'on 2012 and lOl.T Those were the most recciH 
such iuvesHgations (hat Comcast provided the .Suhf.wnmjtii,v. 

iimail from Sarah Leggiit. Counsel lor Di.sh, to SubcommiiteelMay 25. 201fi)('T>.x'dbock T.K)i - Report - lliisines.s.xlsx); Email from 
Sarah Leggiu. Counsel for Dish, to Subcoinmiliee (May II. 2(M6) (-Dc-liscafalion Poiial.xlsm”). Dish did not make a determinalion 
whether the customer complaint was correct. 

'’^DISFM>S12015Nov-C 00450I67;TWC-00(>1746R; COMC.\ST-l>SI-OOOi3665. 

COMCA.S'T-.PSI-000!2! W: COMCA'5T-PSI-OOt)r2194. 

''' Permanent Subcommittee on Investigations, intervimv with Dish ctisfotncr .service ofikial (June 22, 3016), One Dish training dotiirneiil 
sviggcsicd that one in live iranslcrrod calls were invalid or mishandled when translcrred. hiii Dish provided internal metrics that showed 
iowci lates. D[,SH-PSi20 15 N(.)V-0004 50167; Tmail liom Sarah Lcggin, Counsel !br Dish, to Suhcominiitec (June 22, 2016) 
(•'Repovl_Time Series., 062020t6"), 


•34- 


136 


{ 


i've been on hold for over an hour. I’m still trying to get my issue reso lved. My husband i s 
now on the phone, he's been waiting for over thirty minutes. So in oil 


than two hours Just waiting for somebody to help us. 


we've spent more 


- COMCAST SUBSCBIEEB'™ 


At Charter, new agents were trained to "take ownership of the situation" with customers "who have been 
transferred and passed around from automated phone systems and various departments" and who are "angry 
and frustrated because they feel employees are passing the buck."^^^ Despite knowing it was a problem, Charter, 
like other companies, did not track whether customers were incorrectly transferred. Even when transfers were 
valid, they could be done in an ineffective manner. For example, DirecTV in September 2014 noted that among its 
customer-reported survey results, 30% of calls were transferred, and 70% of callers had to re-expiain their Issue 
after being transferred.^®^ 

Customers Call Repeatedly to Resolve Problems and Have Difficulty Resolving Problems: Even when a 
customer eventually reached an agent who claimed that he or she could help, this may not mean that the 
customer’s issue was resolved. See Figure 10. For instance, at Time Warner Cable, over one-third of its subscribers 
in a self-reported survey called customer service three or more times over a six-month period, One in six called 
at least five times, In addition, 41% of the subscriber complaints made to the FCC about Comcast were made 
after subscribers had made repeated attempts to resolve the problem with the company.^®'’ Dish had to caution 


>'''*COMCAST-PSI-()f)OI24:?(), 

CHTR-MVPD-r\Si-00004272. 

Leltor fi'um Brian A, Beiwxkowski, Coimscl lor Chailci', to (.'liaimwn I’ortman ami Ranking Member McCaskill (May 17, 20!(>): Utier 
from Michiic! D, Counsel for Time Warner Cable, (ofTiainnan f’oitman ami Ranking Member McCa.skill (May 27, 2016); Letter 
from Reginald ,1. Pvown, Ccnmso) for ComenM. to Cbaimian Pojtiiwn and Ranking Member McCaskill (May 17, 2(M6),'rinw Winner Cable 
noted tisiil lli«y do not evaiuale whcibcr or how a call was Ir.-inslerred but -submitted recoKis de.inimsirating that 94% orciistnviier calls arc 
manHgerl by one agent wiilunii a transfer, l.citcr from Michael I>. Bopp, Counsel Ibr Titnc VVamcr Cable, Cfniinnaii Portman and Ranking 
Member McCaskili (May 27, 201 1>); Lmail from Michael i>. Wopp. Counsel (or T ime Warner Cable, to .’Subcomniillee (.lime !9, 2016), 

DTV.PSI-0093774, 

T'WC-0()01746S. Thi.s study was done hclbrc Time Warner Cable's “winning on service'' campitign. ami, accoiding to Time Warner 
Cable, doe.s not reflect cumml eoniact rates with eo-sitmier service representatives, limail from Michael D, Hopp, Coimset for T ime Wamer 
Cable, to Siibcoromiltce {June 22. 2(>)(>). 

'"'T'WC-OOOi746fi, 

Ct.iMCAS !'-P3I-000 1.3665. Comcast stated that only "a very small percentage of Comcast’s enstomers lilccompiaints with the I-'CC. 
and it certainly stands to reason that a large niiniber of these arc customers who were unable to resolve their concems with Coincasi alter 
multiple attempis." Letter from Reginald J. Brown, Coimsoi for CoiiK-a.st. to Chairman Pormian and Ranking Menibcv McCaskill f Iiine (9 
2016), 


- 35 - 


137 


its agents on a number of transactions with subscribers "where we agree to do something, but then the 
transaction is not cornpleted."^^^ 

FiGuSf. 10: "Sampi t High ErrosT RfsoiLmON Path"'®® 



At Dish, agents were instructed in training materials to tell customers that they will take a particular action in 
order to reassure the customer but were not instructed to later actually take that action. Among Dish's list of 
instructions to de-escaiate disputes over the quoted price of service was for agents to provide reassurance and 
"advise the customer that you are going to report the issue to managcment."^®^ However, there was no 
independent instruction for the agent to actually report the issue, even though other types of calls have specific, 
independent instructions to report information and to whom to report 


D!.Sll-PS!20 1 SNov.00M076,14. 

'“'’COMCAST-l’Si-()0012.;76.iii slide 17. Infcmt'wofComcosI billing ofHcial (May 10. 2016). Comcast statol that: this slide vvas a 
hy|5otliolical and not an actual event. The iliustisition is titled ’'sample" »«d is part ofa cJwptcr of a presentatioiA titled “itwesti^iatioti around 
Customer Effort," COMCAST-I’SI-OlKtl2i7t.. at slide S. 

'^CDiSH-l\SI2{)!.5Nov-0(KM13y'>;5. 

DISH-I’,SI201 fo^ov-tK'){W 1.19‘>0 - ')‘)2, 995, Di.sh explained Itiesc instructions were not necessary because agents were trained generally 
to report issue.s (o management by highlighting customer concertw using Dish’s '‘Pius One" feedback tool system, fmcrview of Caunsc! for 
Dish (June 20. 2016), However. Di.sh’,'? "Plus Onc'Csj'stenj and a.sivoctated feedback I<*oi pnas'kled to the .Subcontniiflce diti tiol coninin a 
•speciftc category for eompiainls regarding the quoted price of service. Email from Sarah Lcggin, Coiinsci tor Dish, to SulKTirmnitlec (May 
1 1, .2016) {"Pius Ones looJ • 2016 .Ret>ort.xlsnn: Email from Sarah Leggin, Counsel for Dish, to Subcommittee (May 25, 20! 6) 

(‘‘l eedhvick lool •• Report - Btjsinc,ss..xis.'c), Disli's ‘‘Plus One" system and associated feedback tool allow agents to mamially add new 
caiugovics for conrpiaints, iticludmg complaints regarding the quoted price of service. Email from JenTlIunr, (Counsel for Dish, to 
Subcommittee (June 22. 201 6). 


-36- 




138 


{Y]ou have to reoHy watch them on btang or you will have chorges on your bill that 
don't apply 


]and once they are there it is close to impossible to get them off... [Our] bill 
reflected a charge for a phone that we never had. I called in EVERY month and still the 
charge was racking up clase to 1 20 dollars. Finally I spoke with a SUPERVISOR who 
credited me 20 dollars [but] there was more red tape and more hoops to jump through. 


-Charter 


SUBSCRIBER’S’ 


In December 2015, a Charter subscriber whose blindness prevented him from updating his automatic payment 
information online called to ask for a customer agent's assistance. The agent’s response— correct, according to 
Charter— was to refer the subscriber back to the website, which the customer could not see.^^° Charter later 
explained that it did not allow agents access to customer bank account information, and that the customer's 
account information was updated to his satisfaction within one day of it being received by its escalated 
complaints department.^®’ it is unclear why the customer's problem was not resolved or provided to the 
escalated complaints department until the subscriber's Congresswoman intervened,’®^ 

Cable and satellite providers were also reluctant to provide reimbursement or credits to customers who 
experienced poor service. As Dish trained its agents, "(ajdjustments should be your last option for resolving 
customers' issues,"’®^ Charter trained its billing agents that credits and adjustments should only be issued upon a 
customer’s request,’®'^ Many customers who contacted Comcast about billing problems (which often required 
crediting an account to fix the issue) encountered significant difficulty getting their issue resolved.’®® 

Providers Treot Colls as an Opportunity to Make Sales 

When customers called their cable or satellite provider with a problem or question, the providers treated 
most of these calls as an opportunity to increase profits and sell more services. In industry terms, this is known as 
"upselling" customers. Customer service representatives were trained to attempt to sell more services to 


Consumer coinplnint (May 26, 2016) (onime iit (uccosswi Juno 20, 20}6), This onMiplniiu, 

like oihei'.s provided, is :m exaiiipie ol'one c>islonKT’,s c.XjH'ricnce.. niul is not iiiieiulcd to K* repix-sontativcol al! cusioiiiers. 
CUTR-MVPD-PSi.OOO!4767, 

Kmiiii troin Brien Denc'/kowski. Counsel for Chsirter. to Suhcmniniaec (Juno 20. 2016), 

CHTR-MVPD-l'Sl-00014767, 

DfSH-PSI20i.5Nov-0OM04()d9, 

'‘^'cirrR-MVPD-psr-0()()f)4()(>6. 

" (-OMCAS l-P.SI-00012 191. Among cusioniors who conUielcd Comcn-st about a billine [Hoblein during (he first qiifirler of.'!) 1 5, did 
not have their issue resolved; by eomparison. pn>blems rolatw! to service or equipment weic rc.s«.)lvcd over 70% of the time. Ul. 


- 37 - 



139 


customers, regardless of what issue the customer was calling about. 


{ 


The customer service rep was 

troubleshooting the issue at hand. It turned out to be a loose wire in the back of the 
CQbie box. Something that should [be in] your troubleshooting protocol at the very 
least. 


-DIRECTV SUBSCRIBER^’* 


Customer Service Agents Are Trained To Manage Calls and Make Sales: Cable and satellite companies 
trained their agents to control the conversation with subscribers. Customers were "probed" with questions to 
determine what additional services they might buy, "opened" with offers of more expensive services, and 
"closed" in order to complete the sale. Customei^ who became angry or upset regarding their service were 
viewed as an occupational hazard for call center representatives. 

Confro/Kng fhe CaH fo Make the So/e, While customers may believe that, having called a provider, they are 
driving the conversation, cable and satellite companies seek to ensure that their agents are in control. As 
one Dish training block described, "[Y]ou should be able to establish control on a call, maintain control of 
a call, [and] regain control of a call after it has been lost.^®^ Time Warner Cable told its agents to "set the 
agenda" when the customer called, "assert the agenda" throughout the call, and "reset the agenda" to 
sell its customers additional services (as will be discussed below). Comcast told its agents to avoid 
using "trap words" that might reinforce something negative the customer stated, even though many of 
these words seemed to have plain and suitable meanings (examples include "rate increases" and 
"disconnect"). 

Even in situations where upselling seemed unlikely. Charter and Time Warner Cable instructed agents to 
attempt it, Charter's first step in its retention offer strategy was to "attempt to maintain or increase 
revenue, When Time Warner Cable customers were calling to ask about price hikes, the company 


'‘"'DTV-PSl-00;?9668, 

D13H-PSI2015NOV-000425882. 

TWC.000(U2?4; TWC_OOOOI270, 

'■’COMCAST-PSf-OOl)li2t9. 

-“*'CHTR-MVPD-P,S(-00131.^0, 

-38- 


140 


labeled it as an "opportunity" to upsel) advising "It]he price adjustment brings with it an 

opportunity to upseli customers."^^’ 



Employees were trained to "probe" their customers with questions to identify additional services that 
they couid be persuaded to buy.^*^ Agents at Dish were discouraged from asking "purpose-less" 
questions like "How's your day going?" and instead were instructed to ask questions whose answers 
might suggest additional services to seli, such as whether they have children (and might therefore want 
children's programming).^®^ Time Warner Cable said, "Don't ask a question unless it will help you select 
and recommend the right package, unless it helps you save or sell."^®® Agents were even encouraged to 
listen to the surrounding sound at the customers home for a sales advantage; if they heard children they 
could suggest family programming and if they heard cheering they couid suggest sports packages, 
Regardless of the reason that customers may have called, Comcast told its employees to "uncover 
'hidden' needs" of their subscribers for additional services.^®® Charter encouraged agents to ask "high 
value discovery questions" aimed at "aligning the customer's needs" with their more expensive 
packages. 

Time Warner Cable tested a tactic called "open extreme," an attempt to extract the most revenue from 
the customer by selling the most expensive service.^^® In a company training slide, agents were given an 
example of a customer calling in who was currently paying $100 per month. Agents were taught to begin 


'rwc.00000750; TWC.«OOiOS.Sa. 
=‘«TWC_00010797. 
»^TWC-0(>0ii:t9.T 

Twcjioooiioy. 

DIvS:H-.PSI:20 \ .SNov-OOCW i07 17. 

.wtvvc_00001270. 

.DiSH"?fiI20i.'5Nov-00(M!42:t7. 
^'»COMCAST4\S.[-0()0i2105, 
m CHTR. MVPD-.!\S 1-000 1 1 050. 
’*“TWCj:i000!205. 


-39- 


141 


by pitching at an "extreme opening rate" that would increase the customer's biil by 50%.-^^ Time Warner 
Cable told its agents: "Don't make assumptions about what a customer can afford."^^^ Time Warner Cable 
reported that after an initial trial, it ceased using this tactic.^^^ 

Dish and Timer Warner Cable used a technique, called the "assumptive close" or "presumptive close, 
which had the potential to pressure customers to accept unwanted products or services. An assumptive 
or presumptive close sought the customer's consent to the sale or "solution" in a manner that assumed 
the customer has already assented. For example, rather than asking, "Would you like HBO?" agents 
would ask, "Would you prefer I add HBO or Showtime to your account?" or "I can get a tech out to you 
Thursday or Friday. Which day would you iike?"^^^ As Dish advised its agents, closes should be assumptive 
in part because this tactic "reduces the customer's opportunity to object."^^® One example of a Dish close 
was not even a question, but simply the statement; "So you can start enjoying these movies immediately, 
i will add HBO to your account."^^^ 

The industry described these sales pitches as "solutions" offered to their subscribers. Dish justified 
upselling because, by increasing revenue, it would "avoid the potential of more frequent and higher price 
increases for our customers. However, many customers did not seem to want them. Comcast found 
that 18% of its dissatisfied customers were upset that the company had tried to upseli them when they 
called. Upselling annoyed enough customers that Dish instructed its agents to note when subscribers 
asked never to be upsoid.^^” However, but for the case of certain exceptions, such as customers calling in 


TWO 00001 2()S. Chttrtcr agenis wore also to "stan with presenting a package option (hat provides ntorc service.^ for tlic 
enstotner Ciirit-M\M’D-.F.SI-OOOOf)k7. For insiiincc. Charter instructed its agents f(> “sitways lca<l witit (he DVR service pricing for up to 
lour Uo.ses." even when u has a thenper single box DVR service Ice. CM rR-MVPD-|'SI-(HKKl812. 

Fmail from Michael D. Bopp. Counsel for Time Warner Cable, to Subconiiniitee (Juno IV, 20 lb)' 

^’■‘CHTR-MVPIM'SJ-OOOllObi - Ob:!; DISH-l\S120l5Nov-0004 H240; DIS1I-PSI2(H 5N(.v-O()04M246; TWC .00001276. 

DlSH-.PSi2015Nov-0()0.1I424l);DlSH-l’SI2f)l,SNov.t)004!4246; TWO .IKKM) 1276. 

^*''DlSH-PSI20!5Nov-00(H 14240; niSM-l'SI20I.5Nov.00ilM424b. 

-'’DISH-PSI2015Nov-O0n4M240. 

''n)ISH-l’Sl201.‘iNov-0()0450()22. 

COMCAST -FSI-000 124 50. 'niis infomiaiion eori>cs. From a 2014 stirvcy oFdis.satisl'ied eu.stomers who were promplcd with possible 
rctisoivs For their dissatisfaction, 01 those costomers. 18'’iireporltHi an atiompi to opsell as a .source »F their dissatislaeiion, I.eltei from 
Reginaltl J. Brown, Counsel For Conica,si. to Chainnan Ponmaii and Ranking Member McCaskill (July 17. 201.5). 

DISH-l’SI2015Nov-00042l 1 !0, 

-40- 



142 


with service problems, most Dish agents were required to upseli on every call-even when customers 
rejected an initial upseli on a previous cati.^^^ 

Customer service representatives were evaluated and compensated, in part, based on their ability to 
make safes. At Dish, upsefling was usually part of an agent's performance evaluation, in addition to 
monetary incentives, the company offered promotions to its agents. If agents met sales goals, they could 
receive entries into sweepstakes, restaurant gift cards or an office party.^^* And if agents were top 
performers, they could be recognized in company newsletters.^^'* Comcast's billing agent evaluation 
instructions indicated that an employee was performing "below expectations" if he or she did not solicit 
customers to purchase additional services, and scorecards for billing representatives included metrics like 
"Upgrade Transitional Sales Close Rate."^^^ DirecTV agents, even those who handled billing or technical 
support calls, had sales or "upgrade" goals.^^® Time Warner Cable customer care representatives could 
receive sales commissions in addition to their base pay.^^^ 

Handling Cusfomerj' Anger. Customer service representatives underwent extensive training on how to 
deal with angry, irate, or (to use an industry euphemism) "escalated" customers, Charter warned its 
agents; "Do not pause when you address that the customer is not going to get what they desire. !t is 
crucial to instantly move to a can do statement."^^® In a training designed to help agents not take 
customers' anger personally, Comcast told its agents; "Don Miguel Ruiz, a surgeon, author, and 
mythologist, said: '[...) Nothing others do is because of you. What others say and do is a projection of 
their own reality,'"’^® DirecTV assured its agents: "Keep in mind that customers may tend to 
exaggerate,"*^^^ 


I)lSH-PS!20l5Nov-()()04t>n61; DISH-!’.SI20I5Nov.«Ki04ll«)6; DrSK4’SI2{ii.SNov-0(HI-I.S0622, 

DISH-PS12()1 5-000450622, 

i;)ISH-PSt2015N(>v-()(KM2063,i;DIS.H-t>SI2015N(>v.<HK)--l2l278, 

”M.-)i.SH-r’SI20!5Nov-()0(M225O7, 

COMC.AST-PSi-000 11821; (2OMCAKT-PSJ-<t()0 12 1 7 1 . 

DlV-PSi-OOSyilO, DirecTV staicil itial, dcspiie ilicse sales gMis, the main ftinction ol’its iccimicat a.ssistancc agents was to assist 
cusioinei's in resolving teoimical issues, and the priiiwry finKtion of its billing agents was to aaswer and resolve ciislomer inqiiirics. I'fmai! 
from William Clarkson. Counsel for DirecTV, to Siibcommitice (June 20. 20(6) (“DTV.PSI Minority Report Response Submission"), 
-’''TWC.OOO]7L22-l3.');TWC_OOOJ71.t6.-,. 147. 

COMCAST-PSI-GOOI 160,3: TWe 00007777; Cin'R-MVPD.pSI-()O(ti2631:DTV-l*sr-0i')8')4X‘), 

CllTR-MVPD-PSl-OOOl 26,3 1 . 

COMCAST-PSi-OOO I } 608. 

DTV-PSI-OOS9507. 


.41 . 



143 




kike Q motacibrr^du must merttaltv ‘step oslde*^ i 


and calms down. 


and let the bull run past you. ..until it gets tired 


-DIRECTV Instructions to agents on 
“de-escalating" upset Customers232 

Providers devoted a considerable amount of effort into training their customer service representatives to 
interact with customers who were surprised and upset by the high price of their service. For instance, 
DirecTV instructed its agents that "the key is to ask clarifying questions that move the conversation 
forward and toward a resolution, as opposed to questions that have customers repeat what made them 
upset" and to change the subject and "avoid reminding the customer of the reason he or she called. 

See Figure 11. 

Figure 11; Din.rcTV: de-escmating Upset Customers^^^ 



Customer statement; “You advertisements are 
completely false! I am paying WAY more than ! was told 

1 would be paying when 1 signed up. if DIRECTV keeps 
trying to rip me off I’m going to have to go back to 
cable.” 

- Bad example 

Dangerous Clarifying Question: “Earlier, you mentioned 
that you were paying more than you expected. How 
much were you told you would have to pay?” In this 
example, the CSR Is reminding the customer of the 
reason he or she was upset. 

- Good example 

Information Seeking Clarifying Question: “Earlier, you 
mentioned that you were paying more than you 
expected. Help me understand which programming and 
services are most important to you?” This response 
steers clear of cost and allows the customer to focus on 


WINS. 


DTV-PS.I-00894PS - 499. 

2" DTV.PSl-0089525. As pari, of (his instniclion. DirecTV staled that •'the key is lo ask clarifying questions that move the cottvcrsatioii 
forward and toward a resolulioir, as opposeti to r|ue.slions that have customers repeat wliat tm<ic llicm upset.” hi 
DTV-PSI-008952(i. 


- 42 - 




144 


All of the cable and satellite providers provided training on how to handle customers who were upset due 
to a promotional price ending, or an increase in standard pricing. Following a price increase, or 
notification thereof, callers were routed to specially trained customer service agents who received 
training on how to handle callers upset about price increases and the cost of cable. For instance, Time 
Warner Cable and Dish conducted role-play scenarios with agents acting as customers angry about a price 
increase, These agents had access to specialized systems that helped handle calls, provide additional 
information, and even assist in communicating with price increase catlers.^^® For example. Charter's 
system created flags for each account highlighting how rate change affected each customer’s account,^^'' 
and Dish Network created a separate system for handling calls called the "de-escalation portal. 

Retention Agents are Trained to Keep Customs's From Canceling Service: Customers' frustrations 
continued when they attempted to cancel or downgrade service, as they had to clear certain hurdles in order to 
do SO- While the number of providers in certain areas of the country remains limited, consumers may have had 
the option of changing providers or canceling their cable or satellite service and using video services delivered 
over the internet, such as Netfiix or PlayStationVue. Companies were aware of this possibility, and took certain 
steps that made it more difficult for a customer to downgrade or disconnect their service, 

FlC-URf. 12: Time WARNER CABIE RrTFNTION TRAINiMG^^^ 


The Conundrum 


One of the most challenging things about being a retention agent is that to be successful, you have to 
do the opposite of what the customer is calling in for. 

► If the customer is catling into cancel, your goal is to not cancel the services! 

► And if the customer wants to lower the bill, you’re going to try to avoid that, end 
perhaps even ro/se the billl 


DISH-PSr20l5Nov-0004l I072:T\VC_000109.12. 
-’•■'CirrR-MvpD-PSf-oooisisi. 
’'’CnTR-.MVPD-PSI.00015!.22. 

DlSH-PSI2()l,«Nov-0f>040:.U0t>, 

•'" TWC 00001.19!, 


• 43 - 




145 


First, the cable and satellite providers included in our review did not provide an option for customers to 
disconnect their service online; instead, customers had to either visit a retail store in person or call the provider 
to cancel their services. Then, when customers called to disconnect their service, they had to speak to a 
"retention" or "iovalty" agent, whose job was to try to prevent the customer from disconnecting their account. 

With few exceptions, such as the death of a subscriber or a subscriber moving out of the provider's service area, 
cable and satellite companies required that their retention agents attempt to "save" every customer who wanted 
to cancel their service. The exception was Comcast, which, in February 2016, after meeting with the 
Subcommittee, stressed to its retention agents that its policy allowed agents to stop trying to "save" the 
customer if the customer refused or became upset by a retention agent's request to ask the customer questions 
about his or her decision to disconnect.^^^ See Figure 12. 

Ail of the companies in this review trained their retention agents to follow a relatively similar process, which 
included: 

«>:. jiwt'%‘h':rB^-3 5fiBf.ujTriT'Waa-i!B rfn*a' B*iaaai aasd its ii v i’T ri • l Hi ■ > 

Lc d-$c}r»a-jt t-iA-Ji ra a' slsaEstl ■FBiaWt ji ll-Ki 1 >i'< ■!■ ' ' 

fn'Eri ■ij.rff ajrarrtu ■abrx- r jiJ ' ■ a. ■ 1 4 :-' : ' i 


Conicasi ni lowed ciistomCT.': (o subiml a rci'jucsi to cancel scivicc.'! online, after whieij tl»cy w\>n!<| receive a call IW'in an agent to process 
litc disconiteclion ofseiviee. Comcast diaracleri/ed this li>l!i>w-o|> call as bask and imonde<i (o pivvent Iraudiilem ficlivily inui liie 
imautiioiized caiieellaiioit of sm'iccs that may liavc served life-saving or other vritical puiposcs. letter from Reginrdd .1, lliwii, Counsel 
for Comctist, to Cliiiirman l’i.>rHn<in and Ranking Member McCaskill (May 17. 2ftKil, 

COMCAS1-P.Sl-OOOn2,.tO- 2?>'>;TWC..O<>l«tl .i55; TWC_ OOOOl ? l-t .. M.S; TVVC . OtKKti.SdS; TWC_ (KK)Ol 17<>. 'rWC... 0000]4:M1; 
DlSii-PSI20t5Nov-00l)42H9('n DTV-PSI4M)75.Si.5: CliTR-MV(*l.)-PSl-<iO(ll2f!5;i 

COMCAST-PS1-(X)01 ISSd ••• 5.Sft; [’mail li'om David Gringcr, Counsel forCionicast. to .Suboominittee (Feb. If', 2016) (“SI 
Encli)inceineitts_ JobAitf Onidelittcs". ‘‘S4 cUrief 20 1 6-0 i Edited”). 

COMCAST-PSI-OOO! 1 i 12; CO.MCASr-l»SI-OtH)l 1 ! It,’ C.iOMC.AST-.pSI-OOO! I M4; IVrV.psl-(H)8‘Wlf); TWC 00001 109: CIITR.. 
MVPD-P.SI-000{)1)334; DISH- P.SI2()|.5Nov-(J(l0425:V?6; DTV-P.Sl-{«W')‘)i4. 

'‘‘•' .OISH-PS12015NOV n0042M.)?. DISII-P«12()l5Nov-mKMfS0‘)4;COMC.AST-l\SI-(l(K»ll;)M -.315;TWC OOOOl 386; CHTR-MVl’D- 
P.Sl-O00l)0.?;n; i:rrV-P,Si-00899l8. 

DTV-PSl-ft090;)!.S; COMCAST-PSI-ttOOi i.s»; '| WC_,ft<400l4.>l: Dish- l'SI20l5Nf>v- (H)(>4,37649; DI,SM-PSf20l5Nov-0(K'i42i437; 
LinR-MVPD-PS [•00004962 964; CHTR-MVPD-PSI-{)(K104987, During the course nCouricvtcw. C.'omcast updated its Iraining to strcs.s 
that agents would not he penalized for complying with cu-sioiikts’ requests when the cirstonicrs indicated they did not want to discuss their 
reasons for disconnecting. In con'espondcnce with the .Subcommittee, Charter stated that ifcMstomersdo not want to discii.ss wliy they are 
ieavitig. agents arc expected to honor the request. 


-44- 


146 


Cable and satellite providers evaluated and compensated their retention agents based on their ability to prevent 
customers from canceling or lowering their level of service. The retention process could lead to a frustrating 
experience for customers who simply wanted to cancel their service and were not interested in having 
conversations about the reasoning behind their decision or listening to new sales offers to prevent them from 
leaving. Similarly, some customers attempting to downgrade, or lower their level of service, had to go through a 
similar process and negotiate with the retention agents in order to receive lower-priced services. Moreover, 
customers who were willing to negotiate with the agent in order to receive a lower price or different package 
were at a disadvantage because retention agents had much more access to in-depth comparisons of their 
packages with their competitors' offerings, as well as detailed information on the customers' account history and 
pricing. 


Cusfomers Required to Speak with Providers' Agents to Cancel Service. Although customers were 
able to easily sign-up for and upgrade their service online, the cable and satellite providers included in our 
review did not provide an option for customers to disconnect their service online. Customers were 
required to either visit a retail store in person or call the provider to cancel their services. See Figure 
13. 


After watching my bill climb and climb I decided ta finally cut the cord and 
cancel my Charter service.. .It just wasn't worth it. I was forced to folk to a 
retention specialist before 1 could cancel. He offered me a really great deal for 1 
year and promised technical solutions to so me of my problems. I accepted.iHS 

month my bill not only 

went back up but it was higher than it had ever been. I called back and told 
them ! was done for good. The new retention rep offered me the same deal, but 
of course i wasn't going to fail for that again. So glad to be done with this awful 
company! 


-FORMER Charter SUBSCRIBER247 

Although customers were able to easily sign-up for and upgrade their service online, the cable and 
satellite providers included in our review did not provide an option for customers to disconnect their 
service online, Customers were required to either visit a retail store in person or cal! the provider to 


Comcast allowed customers to submit an email request to cancel services online, atkr which they received a call from an agent to 
process the disconnection oi .seirices. (.'omcast characterized this follow-up call as ba,sic and intended to prevent fraudulent activity and the 
unauthorized cancellation of .services that may have served life-saving or other critical iniipose.s. Letter from Rcgintiid J. Brown, Counsel 
for Comcast, to Chairman Portman and Ranking Member McCa.skili (May 17. 2016). 

(..onsunier oom|daint (.Apr. !9. 2016) (online at htjp s:fAvw\v.consumc r3ff<iirs.c<>iuy.aj>k;_iv f) (accessoti .lune 20, 2016). 


- 45 - 


147 


cancel their services . See Figure 13. 



ONllNf Slip- SERVICE OPTlb 

T 


TV PROVIDERS 

SIGN UP FOR SERVICE 

UPGRADE 

DOWNGRADE 

CANCEL 

SERVICE 

SERVICE 

SERVICE 


Cable Companies 




COMCAST 

y 

y 

X 

X 

(CV Warner 
V. Cable 

y 

y 

X 

X 

Charter 

y 

y 

X 

X 


Satellite Companies 




tu 

y 

y 

\/ 249 

X 

DIRECTV 



y 

y 

y 

X 


FtGURi; 13: Self-Service 


ComciisJ allowed customers to suhmit a» email request to cancel services online, after wlikli they received a call tiovii an agent to 
process (he disconnection of services. ConKasi chiimcicrimi this !bl!ow-up call as basic and intended to prevent IVaudiilent activity and the 
unauthori/cd cancellation ol scrvice,s that may have served lite-saving or other critical purp<)sc.s. IxXter from Reginald J. Brown, Couirsel 
for Comcast, to Chairman Portman .md Ranking Memher .McCiskill <May [7. 2016). 

Direc i V said that customers could downgrade packages online through self-service, .so long .i.s the package did not include premium 
channels. In addition, ofticials noted that cusioincis \v!io wanted to remove premiums or cancel a line of hiisiness had to call so that 
DiiecTV could understand their issttes and craft tailored soiution-s to meet their individual needs.’' limail from William Clarkson. Counsel 
for Direc I V, to .Subcommittee (June 20, 20 1 o) (‘‘DTV-P.SI Minority Report Response .Submission''!. 


-46- 





148 


If a cable or satellite customer indicates that they were interested in disconnecting their service, the call 
was routed to a retention agent. For example, a customer may have selected the option to cancel their 
service through the automated phone system and be routed directly to retention, or a customer service 
agent may have determined that the customer should be transferred to retention (for example, if the 
customer needed to lower the price or disconnect servicej.^^- 

Cable and satellite providers trained their retention agents to try and prevent the customers from 
cancelling their service and to minimize revenue loss if the customers decided to stay. To accomplish this 
goal, retention agents underwent special training in which they learned: (!) to engage in a conversation 
with the customer that allows the agent to determine why the customer wants to cancel; (2) to 
emphasize the "value" of the service; (3) to present offers in an attempt to keep the customer from 
canceling; and (4) to overcome objections from customers that are not interested in discussing their 
reasons for canceling as well as customers that do not accept the offers proposed by the agent. 

The cable and satellite providers stated that there were benefits for customers associated with the 
retention process, such as enabling the provider to help customers by educating them about their 
services or addressing problems with the service;^®^ ensuring customers received important disclosures 
about early termination fees;^^^ and giving the provider insight into the customers' needs.^^"^ 


’ " tor the purposes of iliis ehari. wc are using (he (enn downgriule (o muiin changing lo a law cxiK-nsivc pack.ige option or tiiupping a 
.service (plKiiie, Inioviict. or tefevtsion) from a package rather than canceling a premium chiifiticl or ancillary service, Some providers 
allowed customers to cancel add-ons. .such as lUK) or Showiintc. Letter from Bnaii A. Benc/Lowski. Counsel lor Citarter, lo Ciiainiiiin 
Portman and Rimktng Member McCaskili (May 1 7. 2(>I6); Cliartcr Honw Page (hilpsA'www.chartcr.coinAirowscvconlcnt/chfirier-lionK:); 
Chat 1 ransct.'ipt between Charter ami Crystal Huggins (June 6, 2016) chat transcript (ort tile with Siilxarmniitlcc); Comoast; .Ktiniiy, 
P?wlni'l f;)vvrv<i'H‘ Ptige (lmn:..<\vAft \v., s ri ni tv.conVfct>moialc/.si)op /producti>vcrvicw.hn nh: Xlinity, Oina-t Sci vicc Pas<’ 

(hltp://custoincr..Kfinity.coi>v'help-!ind-support/mtcn)ei.^iiK'eJ-my-xfinify-services.O; Letter fmm Reginald J. lirown, Counsel tor Comcast. 

to OiairiiKin Porliium and Ranking Mcmirer McC'askill (May 17. 2016); Time Warner Cable. Cwwd Senw 

(http://www,tunewunicrcalilo,oonVeiys«piHuvliKiS'TiH.is-accoum-am!-billiiipiiiove-<jr-(ran8fcr-scrvicc/ti«w-do-t-niake-cluingcs-lo-my- 

ti.html); i ime Warner Cable. .Vm/Vv Piifx (l>iip:''ww\v.)!itiewarncieahlo coiiv'eu/resitlenii.al.liinil). I.citcr Iron) Michael D. Bopp, Counsel 
for Time Warner Cable, to Chaimmn Poi tman and Ranking Member .VIcCaskill (May 27. 2016); DiivcTV.Mome I’age 
(hl:tp;//www.clircctv,com/ ; DirecTV. Aj^;f(hnps:.-Vsupport.directv.com/iipp/an.swcr.s/deiaii/;! id/) 5>iy,'-/chimge-your- 

dii'cctv-programming-paekagc); I’ermnneiit Subcommittee on Invesligatioas, imerview ot'DiiccTV Customer Service ol'ticial.s (May 25, 
2016); DishHomo Page (hltp://www.dish.cotn) IVrmancni .Subcominmec on InveMigaikms. Imerview oCDisli Customer Service olTcials 
(May 12. 2016); I’crmanciit Snlwommitice on Investigaiions. Call with Counsel for Dish (Juno 10, 2016). 

Pennanont Siibcomniittce on Invcstigaiions. Interview ol' Time W.imer Cable Customer Service oCficials (CKl, ,M), 2015); Pcrnwnciit 
Subcommittee on Invcsiigutions. Interview of Charier Customer Service oflicials (Nov, !(., 2015); Lmail (rum .Sarah Lcggin, Counsel Ibr 
Di.sh. to Subcommittee (June 7. 2016) ("De Lscalaiion Portal*’); PtTmaneni Siibcomiuitfec on Investig.'ilions, Interview of Comcast 
Cu-siomer .Service and Retention Agenfs (J.-m, S.2016); DTV-P.Si-00d049?. 

Permanent Subcommittee on Investigations, interview of Charter officials (Nov, 6. 2()[ 5); Permanent .Subcommittee on investigations. 
Interview oJ (. omens: officials (Sep. 25. 20! 5); Pemwnem Subcommittee on Invesiipation-s, Interview of DirecTV Customer .Scr\'ice 
officials (May 25. 2016). 

’’ Pcrnianenl biibeommitleo on Invcsiigaiioivs. intenuevs of Dish Customer Service oilicials (May 1 2, 2(116) 

- 47 - 



149 


Providers "Probe" Customers about Reasons for Canceffng S^vice: Retention agents worked to gather 
information from customers about their use of the service and why they wanted to cancel. This helped 
inform the retention agents' later efforts to present an offer that would prevent the customer from 
disconnecting the service. For example, agents asked about the customers' favorite television shows, 
what parts of the service they enjoyed,^^® why they want to leave, and specifics about competitors' 
offers. DirecTV was unique in that it had its retention agents practice asking up to five questions to get 
at the true root cause of a customer's desire to disconnects^® 

The cable and satellite providers acknowledge that some customers may not want to discuss their 
reasoning, and simply want to disconnect the service— and they trained their agents on how to collect 
this information without the customers' being aware that they were doing so. For example. Dish training 
documents note that, “(ujsing an effective transition statement to lead into probing will prevent 
disconnecting customers from realizing you are working to save them,"S“ and "you will generally be able 
to get the customer to tell you about their service or vent by making it seem that this is a normal 
process. As discussed in prior sections, some providers also trained their agents to pick up on 
potential selling points through casual conversations and background clues (for example, the sound of 
children playing, which could lead the agent to focus on family-friendly programming), 

While Time Warner Cable, Comcast, and Charter said that agents should ask the customers if they would 
be willing to answer questions,^^^ some cable and satellite providers also trained their retention agents to 
continue the probing process after customers indicated they did not want to answer questions and simply 
wanted to disconnect their service. Time Warner Cable, DirecTV, and Dish had their agents practice 


pCTinanciit Suhcoiiiniitiw vri lincsliguiions. immifwof Time Winner Cnble olflcials «:>c(. 10. .1015); I’criiuitifiu on 

[iivesligaiioiis. Interview of Dish (.Tislomer Seivice omcinIsfMay 12. 2016). 

-^'CHTR-MVPD-l\Si-000l.3O9«. 

TWC. 0000 11.14, 

COMCAST-PSl-OOOl 1102. 

D1SH-PS120 1 SNov-0n042 142.1, 

»» DTV-rSl-00S99)4, DirecTV charficterizcil thi-S process as wenkinp, to get lo "the root cause ol'ucusiomer's paihUnnso that it can he 
resolviul," Entail from Willinm Clarkson. Counsel for DirecTV, to Suhcoiiimiftec (June 20. 20I()K“DTV-PSI Minority Repon Rosponse 
Submission"). 

DISM.PSI20l.5Nov-00042511(i. 

D[SH-I>S!201,5Nov-000421425. 

COMCAS r-PSI-GOOl 1 120, Charier directed its agents to get a sense of the cii.s(onier’.s “strengths," ‘'wcaki te.ssi!s,” and ‘vmotknis." 
among other things, CllTR-MVPD-P.S!-00t>001til. 

w.i TWC_00001081 ; COMCAST-l’SI-OOOl 1220; CIi rR-MVPD-PSI-OOOIlO*)!. 


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150 


overcoming objections from customers, such as, "Please disconnect me today. ! don't want to go into 
detail/'^®'’ "i don't want to answer any questions just disconnect my services,"^®^ and "Just cancel the 
service, A DirecTV official stated that an agent would be expected to continue asking questions after a 
customer indicated that he or she did not want to answer questions, and confirmed that conflict 
avoidance is not a valid reason for failing to make a save attempt.^®^ Similarly, when training its retention 
agents to ask customers why the want to cancel service. Charter noted that agents should continue 
asking questions after a customer has indicated that their reason for disconnecting is "none of (the 
agent's] business." Charter's training document continued by asking the representative: "Do you think 
that a customer may actually tell you that it's none of your business?" and then noting that, "[tjhis 
happens quite frequently."^®® 

Cable companies provided written and verbal statements to the Subcommittee stating that their agents 
should comply with customers' requests when the customer indicated that they did not want to discuss 
their reasons for disconnecting. Specifically, Time Warner Cable officials told the Subcommittee that if a 
customer wants to disconnect and does not want to discuss why, the company will honor that request. 

In written correspondence to the Subcommittee, Charter noted that if a customer did not want to discuss 
their reasons for disconnecting, the agent would honor that request.^^® 

In a September 2015 interview with the Subcommittee, Comcast stated that even in situations in which a 
customer did not want to discuss his or her reasons for canceling, agents would be expected to attempt 
to save the customer if the problem was related to a solvable problem, such as a billing or repair issue. 
Attorneys representing Comcast later said that Comcast officials did not state that "save attempts would 
be expected even when a customer did not wish to discuss their reasons for cancelling, and if they had 
done so, they would have been incorrect."^^^ However, the Subcommittee found retention training 
documents advising that, "You may not always be successful the first time you ask why a customer is 
leaving. It's okay to respond to customer questions or issues and then try to ask a question again, 


l)IS!l-PS12()1.5Nov-(KX)-n764'). SetM.tiiori-.N;nn|)lcs»t: DISl t-r’SI20(5Nov-{K«)41 lOSO ■d«4. 

TWC,.00(Klt57[. 

00001155: DTV-l’SI-0n75501. 

DTV-PSI-0()7466l;l\inmi)H*m Subcommittre on Inw-ttiismions. Imt-mcivofOit'CtiTV Custotiwi- Service ofliciai.s (M;iy l.s, 2016), 
CUTR-MVPD-PSt-00004843. 

Peniianeni Subcommillee on InvcsbKaiions. liuerview oPTime Warner Cable Customer Service oiTtcials (Oct. 30. 201 .5 ), 

Letter li'om Brian A, Benc'zkowski. Counsel Ibr Charter, to Chaiiman PorfmaiianO Ranking Member McCaskill {Nov. 5. 20). 5), 

' Permanent Subcommittee on Inve.siigaiions, inteniew of Comcast Customer Service onieials <Scp. 25. 201 5), 

Letter Irom Reginaiti J. Brown. CotmscI for Comcast, to Cliairman Portman and Ranking Member McCaskil) {.Itine 10. 2016). 
COMCA,ST-PSI-OOOm.33. 


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151 


Regardless, following interviews with the Subcommittee, Comcast informed the Subcommittee in 
February 2016 that Comcast updated its training and call evaluation guidance to note that agents would 
not be penalized in their call evaluations for complying when the customer indicated he or she did not 
want to discuss their reasons for disconnecting.^^^ In its interna! document explaining this change to 
retention agents, Comcast noted that some customers may not want to answer questions about why they 
want to disconnect services, and may see such inquiries "as a hassle or a barrier to disconnecting their 
service. Comcast instructed its agents to "exercise [their] best judgement" on how to handle these 
customers.^’® 

Providers Attempt to "Overcome Objections" From Customers Trying to Cancel Services. After collecting 
information from the consumer as to why they were disconnecting their service, retention agents were 
supposed to attempt to "save" the customer, which couid include addressing a service problem, offering 
a different package, or providing a discounted price. 

Ail of the cable and satellite providers trained their agents to attempt to persuade their customers not to 
cancel their service. As written in a Time Warner Cable training document, "One of the most 
challenging things about being a retention agent is that to be successful, you have to do the opposite of 
what the customer is calling in for. If the customer is calling into cancel, your goal is to not cancel the 
services! And if the customer wants to lower the bill, you're going to try to avoid that, and perhaps even 
raise the bilil"^^* Time Warner Cable also tells its agents that "(m)any customers will say no, but it is up to 
you to change their mind."^^® DirecTV training documents note that "objections are simply needs that 
have not been met," and "(cjustomer objections are really just opportunities to further educate them."^®° 
Dish states that "objections are not the end of the conversation , See Figure 14. 


COMCAST-PSl-()Ot>! 1.^86; f'lmil from David (iringcr. Counsel fiir Comcasp (o Subcommittee (I'cb. !(i. 20ir)). 

• COMCAST-PS1..00tH 1 5S6, 

COMCAST-FSi-OOO 1 1 585. 

CHTR-MVPD-PSl-«()Ona5rt2: CHTR-MVPD-PSI-0(XH)(M62; COMCAST-PSf-tXWI 1221; |■)TV-^'SM^02745() 465' Hisli- PSPOi 5Nov 
•• 00042 15.'?7. 

TWC_ 00001.191, limpini.sis original. 

•■'''TWe, 0()(JO!4.1!. 

l.)TV-r\Si-0()27456: .w ii/.w 1)1'V-PS1-00S‘W.17; D'fV-PSI-OOOOHS, 
i.)[vSII-PS120 1 SNov-OOW ! 2826 -Kil. 


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152 


FiGUSc 14: Disk RtlENiiON TRAINjNG ON OvEaCOMiNG OBJECTiONS^®^ 



Retention agents were expected to make repeated offers to save the customer. For example, some of the 
providers used retention call flowcharts that did not even include a step for complying with the 
customers’ request to disconnect the service.^®^ Several providers trained their agents that if the 
customer objected to a retention agent's first offer, the agent should start the process over again. For 
example, a Dish training document describes a scenario in which a customer has objected to the solution 
being offered by the agent. The training instructs the agent to again attempt to overcome the objection 
and move the cad forward by assuming the customer agrees, and if the customer objects a second time, 
the agent should "start the process over."^®'’ Dish also notes that using a phrase that assumes the 
customer agrees "lessens the opportunity for customers to object" to the offer. Similarly, Charter 
training documents noted that retention agents were supposed to make at least two save attempts and. 
explain that if a customer was not in agreement, they should start the process over (Charter clarifies that, 
"fw]e will not need to start from square one, but we will need to overcome some hesitations before 


D{SH-PS12015Nov-00<)418091, af slide 1, 

TWO.. 00001081; COMC.AST-1’S.I-0()«1 -31.5; CHTR.-MVPD-PSI-OOOOC3.17. Charier laferujxtated its Howchart to include 

aiiow.(ng the cu,st:omor lo disconnect, CHTR-MVPiT-PSl-OOO! 302S. 

DISH-.PS1201.‘5Nov-000438097 .- 100. 

.DLSH-PSI20i5Nov-00042.i44S. 


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153 


moving to an agreement")^®® In its training documents, Comcast instructed retention agents who were 
speaking with a customer that was undecided about whether to stay with Comcast to "make every 
possible effort to keep the customer on the line until a decision is made."^®^ 

Cable and satellite providers specifically trained their retention agents to undermine customers' reasons 
for disconnecting their service.^^ If a customer expressed interest in switching to a competing provider's 
service, DirecTV agents were trained to "create fear, uncertainty and doubt about switching."^®^ Similarly, 
Comcast trained agents to ask questions that "plant a seed of doubt in the customer's mind."‘^^ If 
customers indicated the price is the reason they were disconnecting their service, retention agents are 
encouraged to uncover the "real" or underlying reason for why the customer wanted to cancel their 
service. Some providers placed an emphasis on shifting the conversation away from price, with some 
instructing agents to avoid "trap” words, such as "basic," "deal," "discount," "cheaper," "lower," "rate 
increase,” or a specific price.^^^ Instead, retention agents encouraged customers to think of "value," or 
the presented benefits of the provider's service.^®^ In some cases, this focus on the value of the service 
could lead to retention agents proposing that the customer add services, rather than drop them, so that 
customers may feel that a higher price is justified because of the additional services they were 
receiving.^^'^ 

Retention agents were equipped with extensive information regarding the other providers and the 
customers themselves to assist the agents in overcoming customers' objections. Every provider 
maintained systems that allowed retention agents to compare the various promotional offers, packages, 
and prices of competitors, so that they can highlight their provider's benefits, identify hidden fees in 
competitors' offers, and conduct in-depth price comparisons based on how tong the customer kept the 


COMCAST-rSi-OOOi i 162. 

DiieoTV mu) Comcast objccieci (o the use of the worti ‘'uiulcrminc-" OirccTV shtted that “DirecTV trains its call ceiKci' agents to work 
with the customer to determine the rtx>i cmisc of the service issue ;ind then provide liiiii or her with (he optimal soUitioiv” (•imil tfom 
Williinn Clarkson. Counsel for Diri'cTV. to Siihcominiitee (June 20I6){“DTV-P,SI Mmoriiy Rcporl Response Submissioii’';i, Comcast 
stated that. "Comeast trains it.s veprescntalives to discuss ettstomer needs :md address them." Utter IVoiii Reginald ,!. Hmwti. counsel tor 
Comcast, to Chairman Porlman and Ranking Member McCuskiil (June ifi. 2hl6), 

,.x» y)TV-PSI-00754.'i.'l. at slide 6, This 201 1 training doi'iimeni is no longer in use. 

coMCAST-p,si-oonni,?o, 

TWC,pO()014.13, 

:o2 -j-wc 00001483 -484; TWC_ OOlKilOS?. COVlCA.ST.RSl-lXKlI 1210. 

CHTR-MVPD-PSI-C1000494 1 -042, 

CHTR-MVPD-P.sr.000005f>2; TWC_ 00001070. 


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154 


service. Both Dish and DirecTV assigned customers various rankings based on their value to the 
company, and this could affect the amount of credits a retention agent could offer the customer, and in 
Dish's case, the routing of the customer's call,^^® In its training documents. Time Warner Cable provides 
two examples of customers, one with a $250 package and one with a $15 package to point out that, while 
they "would hate to see either customer go...it's easy to see that...Customer A will impact the bottom line 
more than Customer 

Retention agents were able to offer various credits, discounts, or special packages to the customer, many 
of which were not available to regular customer service agents.^®® In some cases, this led to situations in 
which customers had to aggressively negotiate to get the best deal the provider would offer. In the case 
of Time Warner Cable, agents could offer up to four different prices fora package, depending on how 
much a customer continued to push on price.^®^ in interviews with Time Warner Cable retention agents, 
they indicated that if asked by a customer whether an offer was the best price available, the agents would 
respond that it was the best price available at that time, despite the fact that if the customer pushed 
again, a lower price would be offered.^°®Tlme Warner Cable officials said that the offer sheet helped 
agents maneuver through various package and price offers for customers.^®^ Time Warner Cable 
retention agents said that it could take 10-15 minutes for a customer to negotiate to a lowest-tier 
offer.^f^^ 

Other providers similarly trained their agents on negotiating with customers. Dish stated that agents 
should attempt to satisfy customers with "lesser” offers first, because "keeping higher offers in reserve 
will allow you to come back with a better offer."^®^ DirecTV noted in its training that "more often than 
not, the customer will expect to negotiate. Don't lay all your cards on the table at once, because the 


CHrK-MVPD-P,S.l-0(H)0()54ft: TW€.,(«*0(H Ik7: l)lSn-PSl201SNo\'-00(WlM52; COMCAST-l’SI-fltK)! 1240; D'l'V-PSl-GOyot?!. 

-'’M..>ISH-PSi20i.SNov-0004IOR.'57: DlSM-PSi20!5Ncn-0(H)437l8S; l>lV.psi-{iUS07‘>l-.S4; DIRr.CTV DTV.PSi-009:5,S6(l, Bolh proviciors 
said that agents shcHild never di-sciiss the customer's value ranking wttli iIkhi. DISII-PSl201SN<>v-(X)04h>S17; DTV-l>Sl-l)(j«97Sl-54, 

Dircc I V ottkials stated that Direc’l V planncti ip slop iijiing the ranking sys'cin in ^•cb^ua^•y 2017. Permanent Suhcoinmittec on 
Investigations, interview of DirecTV Customer Service oOictals (May 25. 20U*). 

TWC... 00001.191, 

2"**CHTR-MVPD.PS[-(10004!11 •••114;CirTR-MVPD-rSJ-()001.tl39; m'V-PSI-(K)89‘)24: DTV-PSi-tHIXOOlO; DiSf i-PSOOl.Wov- 
000421462, 

2'WTWC,OOOOi2i4:TWC.OO(>014I2; TWO 00001077 -078. 

Pcvmancnl Subcommittee on Investigations, interview ufTime Warner C.ibie rctemion agents (Feb. 4. 2016). 

U. 

hi 

•*'*' DISH-P.SI20 i 5Nov-0(>042 1467. 


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155 


customer will think you are holding something back and he/she will be able to get more."^°'^ In addition, 
as noted below, some providers evaluated an agent's performance based on their ability to minimize 
revenue losses to the provider. 

Agent /ncenfives Encourage "Saving” and Selling. Cable and satellite providers evaluated and 
compensated retention agents based on their efforts to save customers. Specifically, these companies 
evaluated and scored an agent's retention calls based on a number of factors, including whether the 
agent asked questions about the customers' decision to disconnect or downgrade services, attempted to 
add or maintain existing services to the account, and attempted to overcome customers' objections. 

As part of their internal review process, companies selected a sample of calls to evaluate. Charter would 
"auto fail" an agent if an agent failed to make a sales attempt.^®^ Comcast's call evaluation guidance 
stated that agents who did not make an offer, attempt to overcome objections, or ask for a sale would be 
ranked as "below expectations" and receive no points for that portion of the call.^°® DirecTV's 2015 
training specified, "Failure to make a valid save attempt on every call can result in progressive counseling, 
up to and including termination. Every ... call, regardless of the scenario, represents a save and/or 
opportunity to prevent a future ‘shopper. 

In addition, Charter's retention training documents highlight the need to include upselling as part of the 
retention discussion, Specifically, Charter's training documents state that the retention process was 
designed to keep existing customers by "ensuring that we understand why the customer wants to leave 
and whether or not their service meets their service needs. That being said, we certainly want to continue 
to position products and services and up sell as necessary to ensure the customer has the best value for 
their rrionev."^^° 


.)i,4 DTV.l’S|.f>0S‘.)9:56, 

CMTK.-MVPD-PSi.()000()M2:COMCAST-l»S|.IMi011327-.^?l;T\VC 0(KKH»72y; 'I WC 00000716; Dl.SI[-PS!2ni SNov-000470'!S6 
,358. 361, 

CHTR.-MVPD-Pii;i.00()12«47 -450; t.'OMCAST-PSI-OOOl 1S2| -S24. 

Auto-failing a call mesiiw ilwt tlie agent receives a score of zero for the call. sikI tlwir leaOmhtp is nolilieii. <7HTlt-MVl’n-PS!- 
00012762, 

t.OMCAST-P.SI-0y0i 1570 - 571. As previously {iivstrihcd. Cooica.sl «|xlatcil its guklauec regaixiing how to handU; rctcmioti calls in 
which the customer iloe.s not watti to <ljscii.ss their reasons lor disconnecting. In iis noiice to agents, CotiKast stated that they will not lie 
cvaiiijilcd on items sue!) as making an oflci-. overcoming objections, or asking for the .sale ilThccusiomct <loc.s not want to discuss their 
reasons for discotmeefing, COMCiAS’l-PSI-Oi'iOi 

•'""DTV.P,SI-00755M, 

CHTR-MVPD-PSI-000On553, 


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156 


Retention agents' compensation focused on their ability to save customers, upseii services, and retain 
revenue for the provider. Commissions were often based on the percentage of customers or revenue 
retained by the agents. 

Commissions can also be a significant portion of the retention agents’ salary. Commissions range from 
approximately 25% to 40% of retention agents' salaries at Charter, Comcast, Time Warner Cable, 
and DirecTV, Agents and officials from the cable providers in our investigation confirmed that 
retention agents could access their performance metrics in real-time, creating an environment that 
further emphasized their need to retain customers.^^® 

After a customer successfully canceled his or her services, cable and satellite provider,s could continue 
their efforts to retain the customer. For customers remaining in the service area, the providers continued 
their efforts to retain or win back the customer. For example, DirecTV had a program to assist recently 
disconnected customers in a way that made them more likely to return to DirecTV in the future. 

Agents that were calling as part of the program to win back previous customers were instructed; "Do not 
let them off your line without setting up service."^^® Similarly, in 2013, Charter outlined a program that 
made seven contacts with a customer more than 11 months after they had disconnected service. Cable 
providers even worked to ensure that customers moving out of a providers' service area remained cable 
customers. Specifically, all of the cable providers in this review directed consumers moving out of their 


''’'CHTR-MVl'D-.PSI-0()()0()f>54;COMCAST-!’SI-0iX)ir.27 --.rji; TWC 00(«K)7ih-. Ultcr fiwii Michael i). Dopp. Coi.inscl for Time 
VVarncT Cable, to Chaimiiin Ponmim and Ranking Member McCaskill tJime l.S. lOKik ()TV-PSl-Ott75538 •• 5.59; DiSIl-PSIlOLSNov- 
()0(>47()556,.158, 361. 

Permanent Subcommitiee on Investigations. Iniervicw ofCIwrter oftkials (Nov. 6. 2615). 

' COMCAST-PSi-000 1 1.3.S0; ('f.iMC.\ST-PSl-lKK)l 1374, PcnimiiciU Subconimidcc on Invcstigalions. Intel view of Comcast officials 
(Sep. 2.5, 2015); Letter fVoin llejjinaltl .1. Brosvn, C'»nns(.‘l for Conica.si. to Cliairinan Poiiitian ami Ranking Member McCaskill (June 18, 
2016), 

Pcmianent Snbcommiiiee on Investigations. Intciviow of Time Waincr Cable Oniciah, (Oct. 30. 2015). 

Peimaiient .Siibcoinmiiiee on Invesiigaiion.s. Intervimv ofDirecTV Customer Service oflkials (May 25. 2016). 

•'''’Pcniianent Siibcommillee on Investigations. Interview of Time Wanicr Cable Reteiiiion Agents. (Feb, 4,2016); Permanenl 
Subcommittee on Investigations. Interview ot (.lomc.tst Retention Agent (Jan. S, 2016); Peniument SuhcoinmilU'c on Invostigalioti.s, 
Interview of Clianer Retention .Agems (Jan. 1 1. 2016), 

■'"J.)TV-PSI-00;)97i6, 

''TDTV-PSI.003069.S, 

''^Ci[TR-MVPD-PSI-0lX)14S'>!, 


- 55 - 



157 


service area to a "movers hotline," that only informed consumers about their cable options in the new 
area {not options from satellite or telco competitors).^^” 

SimWor Tocflcs for Customers Who Wartt to Downgrade Service, Customers who were attempting to 
downgrade their service faced many of the same hurdles as those attempting to disconnect. Customers 
that wanted to downgrade usually had call and speak to an agent, if customers stated that they wanted 
to downgrade (lower the price or change the package) or drop a service from their account (for example, 
removing phone, television, internet service, or, in some cases, a premium package), they may have been 
transferred to retention to go through the same negotiation process as customers that attempted to 
disconnect their service. The exception was Dish, which allowed customers to downgrade packages 
online^^^ and made a conscious decision to allow customers to downgrade premiums online, despite 
internal analyses that noted that this policy put it at a competitive disadvantage to DirecTV.^^^ See Figure 
15. 

DirecTV officials confirmed that to remove premiums or cancel a line of business, DirecTV asked 
customers to call so that DirecTV can "understand their issues and craft tailored solutions to meet their 
individual needs. DirecTV said that customers could downgrade packages online through self-service, 
so long as the packages did not include premium channeis.^^'’ Time Warner Cable and Charter confirmed 
that customers could not downgrade online.*^ On June 15, 2016, Comcast informed the Subcommittee 
that customers in Comcast's central region can remove premium channels online and it was working on 
expanding self-service options to allow customers to downgrade to a less expensive tier and drop certain 
services. 


CHTR-MVPD-rSI-0000()l‘1f>; COMCA.ST-psi-OijOi 121}!; TWC-OOOl 

I’m-manenl .Siiix-orniiiiilce on invcshgalions. Cnl! with JcITHIum, Counsel for Disli Network (June 15. 2(116), 
DI.SH-l'Si2015Nov-()()()4703Sy. at sliOc 17. 

t-nwil from William Clarkson. Cininsul for DirecTV, to Subcommittee fJunc 20. 20}(>) C'DTV -ICS! Minority Itc-porl Rc.spon.'^o 
Submission”). 

!<l. 

I,.c!Ccr Iroin Brian A, Benezkowski. Counsel for Charta-. to Chairman Porhtum and Ranking Member MeCaskiti i.Tunc 14. 2016): Iciler 
from Michael D, Bopp. Counsel for f ime VVanier Cable. lo Chairman I’ortnm and Ranking MomN.'rr McCaskiil (.linic 1 .5. 20 1 (>J, 

Letter from Reginald .!, Brown lt> Chairman Portinan and Ranking Member McCaskiil (.Uinc 15, 2016), 


■S6- 



158 


FiGURt 1 b: ffiTCHhiA-L OiSH COMPETiTiV's COMPARi^jN^^^ 


Premiums: DTV vs. Dish 


dl&h. 


' Area 

Comoariion 

Win/Losavs. OtRECTV 

Recommendations 

Imoiicatiot^s 

ASPU focus by 
Customer 

Service a Self 
service Tools 

DISH 

DirecTV 


• Only allow customers 

to dowrtgrads through 
systems with the ability 
topresont offers 

• Improve downgrade 
call routing/training 

• Add targeted 
saves/offers tov/eb 
and STB (June) 

• improved ASPU and 

• Improved agent 
performance and AHT 

” Dish allows customers 
to downgrade across 
tools, including tools 
where we have no 
ability to present sn 
up-se'i or retention 
offer 

• DTV only allows a 
customer a ciown^ede 
path through 
avenues/tooU wttere a 
rstenthm or up^eH 
offer can be made 

• Very specialized agents 

1 

i 


Area 

Comparisoft 

Wm/lose vs. DIRECTV 

Recommendations 

Implications 

Upsell & 
Hatantion 
Tadics 

DISH DirecTV 



recommendation 
functionality in agent 

* Increased ARPU and 
retention 

• Maintain competitive 

■ improved CSR 
performarree 

• Dish is primarily 
focused on resotvmg 
customer issues 

• Agents try to “fee! our 

determine whkh edfer 

■ OTV pushes upseil 
aggressively 
* DTV agents use a 
recommendation 
engine which prompts 
them to sell targeted 
products 




Cable and satellite providers trained their retention agents to minimize downgrades and the associated 
loss of revenue by following a step-down process in which the offers made to the customer progressed in 
a stair step fashion, with the offer that had the greatest financial impact on the provider last on the list. 
Time Warner Cable's training documents noted that in the case of disconnection or downgrade requests, 
the best possible outcomes for the call were (in order); (1) to add services and generate more revenue off 
the account; (2) keep the same services or amount of recurring revenue on the account; and (3) lose as 
few services or revenue as possible.^^® See Figure 16. Time Warner Cable did this through an eight-step 
strategy that began with saving the customers with no change to their account and ended with the agent 
agreeing to drop a service from the account— with one of the steps in the middie including a proposal 
that additional service be added to the account^^® Similarly, Charter provided a step-down offer .strategy 
to its retention agents that started with increasing revenue by upselling or maintaining revenue by 
keeping the customer from changing their account, followed by offering free upgrades, then a retention 
offer that discounted the service, with the last step - only offered by Charter's retention agents - 


D1SH-PSI20.! ,5Nbv-0(X)4702S<). ARPt,f, «)r. Average Revenue Per User or Unit is an itidiisiry term relvrrinj? (lie monthly vcci.irritig 
revemte per user or unit. AHT refers to the average handle time of the call. 

‘'■'''TWC,.. 0000 1101. 

'^‘'TWC.. 00001120. 


■S7- 



159 


proposing less expensive, ftmited-channel packages.^® Charter's training aiso inciuded a scenario in which 
retention agents suggested an offer that costed more money than a customer's existing package. 

Dish's training documents emphasized that "agents should not just comply with customer requests to 
remove programming; this is bad for DISH and bad for the customer."^-’^ A DirecTV training noted that if a 
customer called to remove premium programming from their account, an agent may respond, "I'm 
shocked to hear you want to cancel those services,” and "...most of our customers can't live without 
-Starz, HBO, DirecTV aiso noted that agents should follow a "step down" process, in order to 

"retain as much DijecTV base package revenue as possible and to ensure the customer is getting all of 
his/her favorite programs/channels in the right-sized package."*^"* An evaluation of a Comcast retention 
agent stated that the agent should continue with a top-down approach, as this saves revenue on all 

FisuRE 15; liME Warner Cable eop-Down Afprcach^^^ 

What is your strategy? 

: Stibllu* and protw 

i 

?u('-V8luc ssve 

ssVe' 

y' '■Wp*W» 

, • : fln*lsm 


stages 

SUptt 


CHTR-MVPD-.PS1-00013139; Pcrmancti? SubcommiNcc on Invcsiigoiion-s. Interview of Chatter O.«iomcr Servian oiticials (May .11, 
2016), 


(:.:fn'R.M.VTD-PSI-OOOOOs62. 

:*-’^DISH-PS12()i5Nov-0IX)4l2?26. 


”'DTV-PSI.009022.'i. 

"'‘W. 


COMCAST-PSI-000I.5820. 


rWL:_000(J]I20 


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160 


Providers' Efforts to Address Customer Service 

Cable and satellite providers have publicly acknowledged their customer service problems. In 2015, 
Michael Powell, the chair of the National Cable and Telecommunications Association, stated to the Washington 
Post that, "[c]ustomer service right now is completely unacceptabie."^^^ During a Senate hearing on the proposed 
Comcast-Time Warner Cable merger in 2014, Comcast Executive Vice President David Cohen and Executive Vice 
President and Chief Financial Officer Arthur Minson submitted joint testimony stating that they knew they had to 
continue to focus on improving the company's customer service.^^® During an earnings call in February 2015, Dish 
executives admitted that customer service problems had caused the company to lose subscribers.^^® Charter 
Chief Executive Officer Tom Rutledge stated that after the Time Warner Cable-Charter merger, his first priority 
was to improve service for his customers.®^® In 2012, theformer Chief Executive Officer of DirecTV, Mike White, 
stated during an interview that it was common knowledge that the pay television industry has poorly rated 
customer service. 

in addition, it is clear from documents submitted by most of the companies that they took steps to assess 
customer satisfaction and address pain points.®**^ Comcast and DirecTV in particular submitted documents that 
showed an in-depth analysis of problems affecting customers and proposed solutions for addressing them.’^- 

Cable and satellite providers have also released advertisements and public plans to tell consumers that they know 
customer service is a major problem for consumers and developed plans to address these problems. 


’’’ Til/} cah/e liihhyi.K(: X'tistomtr sirrtce right now is completely unacccpitihk-', WASiilN(i'it)N I'd.'si t.T 2015) (otjlino iH 

littps://ww\v.wasKingU)npos!.com.'ncvv's/lhe-switch'vviv'20l5/02.T3'lop-cahtc-iohbyi.sf-cus<oiiicr->.c»'vicc-rji'lu-now-is-c()mplcU'iy- 

iiiUK'.t'up{abIe.T. 

United Staves Senate Committee on the .indiciary. Tesiiimniy of David 1.. Cohen. Executive Vice Trcsidcnl. Comcast Corporation, and 
AnlivirT. \finson, Jr., F-xcicuuw Vice I'rcsideni and Chief Financiai (ifficcr. Time VVanicr Cable Inc., at 24, Hearing on The Impact of'ilic 
Comcast-Time Warner Cable Merger on .■Vnichean (.’omsomeis, I iiMh Cong. (Apr. R. 201 4). (online at 
http.s://www,jticiiciiiry.scimie.gov.dnhVmcdii./doc/04-lW.!-H.('henMinsonJuiniTcstinHmy.p<i(). 

Dish Ncfivoyk (DISH) Q-l Hcxuli.i Improve Ihn Suhxinhcr Loxscs liicix'asc. Bu.siNk'ss i''tNANf..r?Nf;ws. (i-elj. 2T 2015) (online at 

littp;i7\vww.lMisjnessfinancenew.>i.conv'2lt>'>l -tiish-rictwork-dish-cj4-res«JtS'impixive-lHii-.siibscriher-losses-inci'e»sc/). 

“"For TWe Customers. Cltnrhr CEO Sows M, tin (ioiil is 'Impnn'c Service'. NYI (May (X. 2016) (online at lH!p://www,nyl.i;om/j)yc/!ill- 
boroiiglis/ncws /20 1 fi''05/18/eh!iner-i'eo-toin-tiiii(:dge— \ve-wimt-io-iinprovc-scfvice--fbr-twc-ciistoinors.hnnil. 

.Sicerin.f' DireetTI'' Rifilii: Q<.<i.4 »-iih Mike fVliiie. Mut.TK.'HASNrLNliW'S (Dec. 2 i. 201 2) (online at 
http;//www,niulticK.iiincl.cam-now,s/linance/,>ilccrin!{-dirc-etv-rishl-ip-inike-whi(e/’27IW>4). 

nTV-P.SI-0051<>26, at slides 2. 14. and 10 ; l.)TV.|>S{.OO.t<«>72; CHTR-MVPi>-i'S(-tXiOI47bO; COMCAST-1’SI-0(1012!7(:; 
COMCAST-PSI-OOOi2i%; TWC: (H)0!75SK; f-nuil IVom Sarah Lcggin, f:oimsel for Dish, to SvibcominiKce (June 7, 2016K‘'CSC 
Financial Review - November 2015", .siitles 2. 7); DTV-f’SM)093786-, DTV-PSI-0(W3607: CllTR-MVPD-PSI-OOni4772. 

DTV-PSi-0()5M)26.alsli<ics2. 1-4. and Ift; D1 V-PSI-003%7>; COMC.-\.ST-PSMk)OI:! 76; CDMCAST-PSl-noOCldb' DTV-PS!- 
009.>7S<i; DTV.P.SI-009.J697, 


-S9- 



161 



Time Warner Cable iuidrci^xx'!! emUymer eompkiiiitx in nev- ad campaign, Dcai.1:.r ((.Kj. 4, 2015) (oiilinfi yt 
(ittp://www.clcveiimd.com'mcii'o/indcx.ssr/2(>l5/IO/iimc,\vymer_cablc_a<Wresscs cu.lilinl). 
hi. 

Time Warner Cahk Admitx Its Pa.M .Vw.v, an./ ro.v.v to Hr Hetu-r. in Dmr.s Comk .Spnts 'Ifue can chmae. then .w can mi!' AtJWPi'K 

(May 3. 2016) (online at hltp:''''www.ailweck.coinm'vi’s/iulvcni5ing-hryiidmg,''iin)C'Wiin)cr-ai6k;-ap<ii<i!'i/;e';-its-i>wn-r)o1orioiis-ci.isUiiiier- 
sei'viec-(ir.si-c[imp;ijgiMtdb-17i2(>5). 

5'” www,ti)ncwaniercyhlc,com/co[j(enl.'’Kvc.'en/y(ioiit-us.'prcss/livc-ctisto»ters-can-snon-gci-ii-j!tympse.h(inl 

TWC_On000020, 022; 024; 028 

Comca.n 's Plan to Dnminaie the Coble Im/mtiy Pathtl. So H Mififtr Start Bring S'ice to Cuitomeiy /nxteail. Sl-ATH (May 6. 20 1 5) 
(online al 

iittp,v/www.slalc.com/hlogs/moneybox/2015/05/00/comcx'it. customer^ service Uinuiroiiml pliin show vip.<m_timc_a 1 kT failed nicrgcr.ht 
ml); COM(:AST-I»SJ-0000010J; (?OM(.'AST-l’S!-<)t)()()()i 12 ; (■(.)MCA.ST.pSI-00omil20: COMCAST-l’SI-OOlKKlOOl C{1MCAST-I’.S1- 
00000103, 

COMCAST-PSf-OOO 14236. C»mca« speiK over S2 billion anmialiyon cusiomc-r service. I.dier tfoin Reginald J. Brown. Counsel far 
Comcast, to Chairman rortnuin and Ranking Member MeCa-skill (June IS. 2016). 

CHTK-MVPD-I’Sl-0(m00092. 


-60- 



162 



These efforts to improve customer service have had some impact In its 2016 report on customer satisfaction with 
various industries, the American Customer Satisfaction index (ACSI) noted that customer satisfaction with 
subscription television service increased 3.2%; however, it "remains among the lowest-ranked industries covered 
by the ACSI," scoring "Just slightly above last place Internet service providers for customer satisfaction."^^’ 
Specifically, while Comcast and Time Warner Cable saw significant gains in their 2016 scores, they remained 
below their industry average, and Charter's score declined.^^* Dish's and DirecTV's Scores remained steady.^^® 


CHTR-MVPIl.PSl-OOOJ()i86. 

lei 

DTV-P,SI-0O9356.T 

l;m:iil from Sarah l-oggin, Counsel for Dish, to .Siihcommittvc (June 7. 20Ui) (XX l‘miccr List - 0(f>,03. 1 (i”>. 

" hltp;//<iboiit,dish,com/{M'ess-relen,se'proiliiels-aml-ser\’ii-cs'dish-porsonalizc.s-cus(onicr-scrvtcc-cxpericnce-i!iy-tcch 

.AC.SI relecomiTuinicalions 2016. Amciic.'m Customer Satisfaciion Index ( June 1. 20161. at I -2. 

Direcl V atid Dish's scores remained .steady. ACS! rclocommunicaiions Report 2016. at 3. 

ACSI Telecommunications Report 2016. at 3. 


•61 - 



163 


HEARING EXHIBITS 

Permanent Subcommittee on Investigations 

JUNE 23,2016 

“Customer Service and Billing Practices in the Cable and 
Satellite Television Industry” 



164 


TABLE OF CONTENTS 


Exhibit 1 - Subscriber Base and Market Capitalization of TV Providers 

Exhibit 2 - Price Increases for Charter Bundles 

Exhibit 3 - Example of Promotional Pricing Ad with Fine Print 

Exhibit 4 - Dish Promo Package with Roll to Pay Premiums 

Exhibit 5 - HD, DVR, and ars fees in 2015 

Exhibit 6 - Increasing RSN and Broadcast Fees 

Exhibit 7 - Introduction of RSN and Broadcast Fees 

Exhibit 8 - Average Package Price Increases 

Exhibit 9 - DirecTV - Price Awareness Test 

Exhibit 10 - Comcast Sample High Effort Call Resolution Path 

Exhibit 1 1 - De-Escalating or Clarifying Questions 

Exhibit 12 - Time Warner Cable Retention Training 

Exhibit 13 - Self-service Options 

Exhibit 14 -Time Warner Cable Sample Transitions From Retention Training 
Exhibit 15 - Dish Retention Training on Overco.ming Objections 
Exhibit 1 6 - Internal Dish Competitive Comparison 


Exhibit 1 7 - Time Warner Cable Top-Down Approaci i 



Exhibit 1:SUB5CR 




166 



IVPD-PSI-00000770 







'RiciNG Advertisement WITH Fine Print 





168 




EXHIBITS: HD, DVR, AND ARS Fees IN 


169 










172 



Source: DTV-PSI-00066616 




Exhibit 10: ''SAiVip!.t High Effort Resolution Path" 


173 



Source: COMCASr-PSi-0001 21 76, at Slide 8 




Exhibit 11: DIRECTV; OE-ESCALATiNG 


174 


5 

o 



SouiCe: Dfy-PS!-0089526 





Exhibit 


175 



Source; TWC 00001391 



176 




Exhibit 14; Time 


177 



178 




179 
















180 



181 


KT]SrGl 8c 


August 15, 2016 


BY EMAIL DELrVERY 
ATTN: Kelsey Stroud, Chief Clerk 

The Honorable Rob Poitman 
Chairman 

Peniianent Subcommittee on Investigations 

Committee on Homeland Security and 

Governmental Affairs 

United States Senate 

SR- 199 Russell Senate Office Building 

Washington, D.C, 20510 


King & Spalding LLP 
1700 Pennsylvania Ave, NW 
Suite 200 

Washington. D.C. 20006-4707 
Tel: +1 202 737 0500 
Fax: +1 202 626 3737 


Eleanor! Hill 

Direct Dial: (202)626-2955 

chill(tLk.slaw.com 


Conlldential Treatment Requested 

The Honorable Claire McCaskill 
Ranking Member 

Permanent Subcommittee on Investigations 

Committee on Homeland Security and 

Governmental Affairs 

United States Senate 

SR- 199 Russell Senate Office Building 

Washington, D.C. 20510 


Dear Chainuan Portman and Ranking Member McCaskill, 

On behalf of our client, DIRECTV, thank you for the opportunity to review and correct the 
draft transcript of Rasesh Patel’s testimony at the June 23“' Subcommittee hearing entitled 
“Oversight of Customer Service in the Cable and Satellite Television Industry”, As you 
requested, we are enclosing proposed corrections, marked in red ink on the transcript, on behalf 
of DIRECTV. 

In addition to those typographical, grammatical, and clarifying changes, we are also 
proposing certain edits intended to address and clarify one statement by Mr. Patel wherein he 
unintentionally provided an incomplete answer. When asked to “address the practice of charging 
someone to remove an optional product from your bill”, Mr. Patel responded: 

We don’t - we don’t charge for removal of any services other than warranty 
service and the reason that that's in place is, essentially to prevent gaming. A lot 
of times, you know, a consumer requires free services or a free upgrade, which is 
a part of our protection plan program, they can get an equipment upgrade every 
two year. What we were trying to prevent is a consumer getting that benefit and 
then the very next month removing the service, (p. 94, at lines 7-14). 



182 


The Honorable Rob Portman 
The Honorable Claire McCaskill 
August 15, 2016 
Page 2 

We note that earlier in the hearing (at pages 13-15), the discussion had focused on a 
charge for termination of a protection plan. Given that context, Mr. Patel addressed the 
protection plan charge, but unintentionally neglected to note that there is also a $ 1 0 fee charged 
to customers who add premium channels and then cancel them within a period of 30 days. 
DIRECTV assesses this fee to dissuade customers from subscribing to premium channels for a 
short amount of time in order to “binge” watch a particular program and then cancel the premium 
channel shortly thereafter. In the interests of accuracy, we ask that you consider including our 
proposed language on that point. Specifically, we request that line 7 through the phrase “to 
prevent gaming” on page 94 of the transcript be changed to read as follows: 

Mr. Patel. We do not charge for removal of any services except in certain cases 
involving the tennination of premium channels or warranty services. We charge a 
$10 lee to customers who add premium channels and then terminate them within 
a period of 30 days, to avoid customers subscribing to premium channels for a 
short amount of time in order to “binge” watch a particular program and then 
cancel tbe premium channel shortly thereafter. With respect to termination of 
warranty services, there is also a charge that is in place essentially to prevent 
gaming. 

Alternatively, we ask that this letter, which confirms Mr. Patel’s intent and desire to correct his 
testimony, be included in the record. 

Finally, we have also enclosed DIRECTV's written responses to the supplemental 
questions for the record submitted by Ranking Member McCaskill and Senator Baldwin. These 
responses, as well as the corrections to the transcript, reflect a good faith effort to be accurate 
and responsive within the requested time frame. As always, please do not hesitate to contact me 
at 202-626-2955 should you or your staff have any questions regarding these responses. 


Sincerely 




Eleanor Hill 


Attachments 



183 





statement for the Record 

Before the Permanent Subcommittee on Investigations 
Customer Service and Billing Practices in the Cable and Satellite Television Industry 

June 23, 2016 

Thank you Chairman Portman, Ranking Member McCaskill, and committee members for 
initiating this important investigation and hearing. We appreciate the opportunity to 
provide this statement for the record. 

The National Association of Telecommunications Officers and Advisors ("NATOA”] is a 
national trade association founded in 1980 that promotes local government interests in 
communications policy. NATOA analyzes and addresses emerging issues such as 
broadband deployment and adoption; cable franchising; Public, Education and Government 
(“PEG"] programming; and wireless facilities siting. 

Many NATOA members represent Local Franchising Authorities ("LFAs”] from across the 
country that are actively involved in monitoring and enforcing cable customer service 
standards. One issue that has risen to the top of consumer complaints has to do with 
increases to basic service tier rates and fees, along with increased costs for equipment and 
tech support. These steep increases to basic-related equipment and services impact those 
subscribers who are taking the most affordable tier of service and include those on a fixed 
income, or who may have older TV equipment in their homes, or who may be using limited 
basic cable to receive their broadcast and local PEG channels to keep them connected to 
their community. 

One of our members reports that increases in a variety of equipment and installation fees 
(as well as unexplained fees that are purportedly for programming) will result in basic tier 
subscribers receiving a cost increase of nearly 50%.t Monthly CableCARD fees went from 
$.80 to $1.50 and limited basic one only converter fees increased from $1.00 to $2.50. 
Installation fees, on average, have nearly tripled in price, with some services over six times 
as costly (e.g., the price to “activate [a] pre-existing additional outlet" rose from $5.75 to 
$35.00]. Other new installation charges are simply hard to believe. The cost to connect a 
DVD player, for example, is now $35.00— but only if it is connected at the time of an initial 
installation. After that, the price jumps to $70.00. 

Consumer bills also have been complicated by the addition of new, unexplained fees for 
programming that was already included in their subscription packages. In 2016, many 


1 The cable operator serving that member’s jurisdiction previously offered a limited basic 
package that included about 30 video channels, Music Choice, one traditional box, one 
digital adapter, two remotes and all taxes and fees at a price of $14.64. Under increases that 
took effect over the past year, the same package of programming, equipment and services 
now costs an estimated $2 1.41 — up 46% in a single year. 



184 


LFAs saw huge increases in the "broadcast TV” fee - from $1.50 to $4.50 - and "regional 
sports network" fee - from $1.00 to $3.00. These fees are not only confusing to consumers, 
but misleading, as well. Many subscribers choose specific programming bundles to lower 
their co.sts and they sign contracts to keep those costs in place. However, because these 
fees are outside the agreed upon bundle price, subscribers see their budget busted and 
locked into an agreement they cannot get out of. 

Many LFAs could have questioned and reviewed many of these increased fees and costs 
under their existing basic rate regulatory authority. Unfortunately, just over one year ago, 
the FCC adopted regulations that stripped local governments of much of our remaining 
authority to protect our local residents from unfair cable billing and customer service 
practices. The Commission asserted that its actions were based on the development of so- 
called nationwide "effective competition" in the multichannel video programming 
distributor ["MVPD"] market. We would have found it surprising if consumers considered 
the MVPD market competitive even a year ago, but since that time, concentration in the 
MVPD market has dramatically increased due to FCC approval of multiple MVPD mergers. 
Among other changes, one-fourth of Americans lost a choice of MVPD in the merger of 
AT&T-DIRECTV. 

While true competition normally would result in operators competing for subscribers on 
price, service or other features, the opposite is true for most consumers today. With LFAs 
now virtually powerless to hold pay TV providers accountable, consumers no longer have a 
shield against year-after-year price increases and other anti-consumer actions by the pay 
TV industry. Local governments’ role has been reduced to monitoring the real-world effects 
of the Commission’s actions on consumers. Today, equipment fee increases and other 
harmful changes are on the rise and will continue unabated without reasonable 
intervention. 

In light of these consumer harms, we encourage Congress to scrutinize the FCC's misguided 
changes to the "effective competition" process for purposes of cable rate regulation 
authority and encourage the FCC to re-establish the ability of local governments to protect 
our local consumers. The FCC should be expected to use any tools at its disposal to reduce 
MVPD industry concentration and prevent consumer billing and customer service abuses. 


National Association of Telecommunications Officers and Advisors 
3213 Dn!-" -655. VitipiiM. 22314. i703i 513-8035. (703> S97-708D • FAX, www 



185 


Post-Hearing Questions for the Record 
Submitted to Comcast 
From Senator Claire McCaskill 

“Customer Service and Billing Practices in the Cable and Satellite Television Industry” 

June 23, 2016 


Q. How does Comcast inform customers who arc enrolled in automatic bill pay about 
changes to their bill, such as price increases and overcharges? 

Comcast customers receive notifications about upcoming price increases based on their 
selected statement delivery preference - print or ecobIM. Automatic bill pay customers may 
choose to continue receiving paper bills through the mail, in which case they would receive 
notice of price increases through their print statement, 

Comcast generally provides all of its customers, including automatic bill pay customers, 
with 30 days’ notice ahead of the effective date of any change in its prices. See COMCAST-PSI- 
0001 1060, In certain markets where Local Franchise Authorities require greater notice (e,g,, 60 
or 90 days), Comcast complies with those regulations. 

In the instance where Comcast overcharged an identifiable group of customers, it 
provided customers with specific notice of the overcharge, including to autopay customers. All 
customers, including autopay customers, also received notice of the overcharge through a 
message on their bill. Autopay customers who select the ecopay option still have access to their 
monthly bills, both online and through the “My Account” App. 

Q: What efforts has Comcast made to understand whether customers arc receiving 

adequate notice that their bill will change or that the cost of their package will increase? 

Comcast has conducted research regarding customer satisfaction across multiple 
dimensions, including customer awareness of the conclusion of a duration of a promotion, which 
often results in a price increase to customers. Comcast’s customer research suggests that its 
customers are aware when their promotional rate is about to expire. See COMCAST-P.SI- 
00012639 at slide 8. 

Comcast has every incentive to ensure that its customers are aware of upcoming bill 
changes and price increases. As the Subcommittee has observed, it is at these points that 
Comcast customers are most vulnerable to “churn.” To attempt to address this issue, Comcast 
has taken many steps to better inform its customers about bill changes. For example, customers 
who supply their email addresses and cell phone numbers are provided with email and text alerts 
about upcoming changes to their bill. The My Account App also allows customers to cheek their 
bills at any time of the month. All customers would also receive information about a price 
change when they login to xfinity.com. And, any time customers make significant changes to the 
services on their account, they receive a confirmation of the change of service via email, as well 
as a tailored video bill explaining their new bill. 



186 


Comcast has also focused on ensuring that its customers are aware of the terms of any 
promotional rate that they receive. Comcast trains its personnel to emphasize at the point of sale 
the duration of a promotional rate, including informing customers what their rate will be at the 
conclu.sion of the promotional period. See COMCAST-PSI-OOO 11557 and COMCAST-PSI- 
0001 1 808 (requiring agents to review the total package price, including promotion roll-off date 
and pricing with the customer prior to concluding the call). 

Q: .An internal study conducted by Comcast found that 40% of customers who called 

with a billing problem were unable to resolve it on the first call. Is this statistic an accurate 
depiction of what current Comcast customers experience when they call with a problem? 
What effort is Comcast making to improve a customer’s ability to have their problem 
resolved the first time they call? 

The study referenced reflected only a sample of dissatisfied customers responding to a 
survey. It is not an accurate depiction of what all current Comcast customers experience when 
they call with a problem, 

Comcast is focused on improving its customer service, and these efforts include 
improving its first-call resolution rate for customers who call with any issue. On the front end, 
Comcast has worked hard to minimize the need for customers to call with a problem in the first 
place. These efforts include tools such as the video bill and My Account App referenced above. 
Comcast also gives customers the opportunity to view and pay their bills through the interface on 
their XI platform. 

Comcast is in the midst of a multi-year plan to reinvent its customer experience and to 
create a culture where all Comcast employees are focu.sed on exceeding its customers’ 
expectations so that wdien people do call with a problem, customers are able to resolve that 
problem. The core elements of Comcast's overall plan include: 

• Creating more than 5,500 U.S.-based customer service jobs over the next three years; 

• A goal to be on time for customer appointments all the time or we automatically 
credit a customer; 

• Major inve.stments in technology and training to give employees the tools they need 
to deliver excellent service; 

• The renovation and opening of hundreds of retail stores across the country; and 

• The development of new customer-facing technologies that will enable customers to 
interact with us how and when they wish. 

Several elements of the plan address Comcast’s ability to address customer concerns the 
first time. For example, Comcast is currently rolling out a new, cloud-based platform that gives 
employees a better, holistic view of the customers account history so they have everything they 
need at their fingertips to help customers faster and prevent the need to start over each time a 
customer speaks to a different agent. Comcast is also enabling self-service whenever possible to 
give customers the same tools our agents have. 



187 


Comcast has also overhauled its training by rolling out the Net Promoter System 
(“NPS"), which is the gold standard in consumer-facing industries. NPS is based on one simple 
question: how likely is a customer to recommend Comcast services? Call center personnel get 
real-time feedback from the system, and managers are able to quickly learn about potential 
issues. So far, we’ve seen quick and meaningful improvements in customer satisfaction where 
NPS is being used, and we are continuing its roll out in all of our footprint. In Portland, Oregon, 
we’ve seen customer satisfaction improve by 21 points and employee satisfaction improve by 40 
points since the NPS program’s inception. 

These reforms are already yielding results. Comcast’s customer service satisfaction 
numbers are up 1 1 .5% since 20 1 4 and our customer dissatisfaction numbers are down 20% in the 
same time period. Comcast has experienced a 35% reduction in customer calls to agents since 
the end of 2013, and that reduction was driven by a 27% reduction in the number of customers 
who need to call back. 

Q. Has Comcast changed its billing notification practices related to price increases? If 
so, please describe the changes that have been made and when these changes were 
implemented. 

Comcast has undertaken a number of initiatives over the last five years to make its 
customers’ bills as accessible and as easy to understand as possible. With regard to price 
increases, notice is currently provided using monthly bill inserts and bill messages, online, and 
via email and text message. Customers can also learn of the change through the “My Account” 
App, 

Q. Please provide a list of all promotional offers available between June 1, 2016 and 
July 31, 2016 that are “roll to pay” or that require customers to affirmatively cancel when 
that promotion ends or face being charged for that programming or service on their next 
bill. For those promotions that are “roll to pay,” please indicate: 

1. Whether customers can cancel the programming or service online or whether they 
must cancel over the phone. 

2. Why Comcast decided to make that promotion “roll to pay” instead of “roll to 
drop.” 

Please see Appendix A fora liiit of promotional offers available between .lune 1, 2016 
and .luly 31, 2016. Comcast customers may cancel promotional offers over the phone, in 
Comcast retail stores, and at UPS stores across America. As noted in previous submissions, 
Comcast is currently working to develop its capabilities to facilitate the initiation of the 
cancellation process online. 1 hrough Comcast’s “Project EASE,” Comcast customers can go 
online to request an immediate call to cancel their service and/or prepopulate a form with most of 
the necessary information to obviate any need for all but the most basic of follow-up phone calls. 
Comcast subsequently calls the customer at a requested time to verify the request and process the 
cancellation. The brief live verification is required, however, in order to protect customers' 
personally identifiable information and to prevent fraudulent activity. Also, Comcast is 
evaluating whether it can further facilitate online cancellation for some services. 



188 


Comcast continues to offer promotional rates for specified periods of time in order to 
keep up in the highly competitive marketplace and to provide customers with the best possible 
value proposition. Comcast trains its representatives to emphasize at the point of sale the 
duration of a promotional rate, including informing customers what their rate will be at the 
conclusion of the promotional period. See COMCAST-PSI-OOOl 1557 and COMCAST-PSi- 
0001 1 808 (requiring agents to review the total package price, including promotion roll-off date 
and pricing with the customer prior to concluding the call). For any promotional rate that 
Comcast offers, sales and customer care agents are required to state the duration of the 
promotion. For term agreements, Comcast has a formal process where the terms of the 
promotional rate, including its duration, are disclosed, and the customer's acceptance thereof is 
captured through a verification process where the customer affirmatively consents to the terms of 
the agreement. Customer bills also indicate when a customer’s rate is on a promotion. As noted 
above, Comcast’s customer research suggests that its customers are aware when their 
promotional rate is about to expire. See COMCAST-PSI-OOOl 2639 at slide 8. 

Q. Arc front line agents allow ed to downgrade or cancel a customer’s service if they 
request it? 

Comcast’s front-line retention representatives are permitted to downgrade a customer’s 
service upon request. 

Q: Are customer service representatives penalized if they fail to ask why a customer is 

changing or cancelling their service? 

Cusitomer requests to disconnect or downgrade service are generally handled by 
Comcast’s retention representatives. These representatives are not required to make a save 
attempt when a customer calls seeking to change or cancel their service. And to earn a rating of 
“meets expectations,” retention representatives must first ask “permission to ask questions” 
before even beginning a save attempt. See COMCAST-PSI-OOOl 1564. 

Comcast does believe that it is important to try to understand why its customers are 
considering leaving Comcast. In many instances, a customer who calls seeking to discontinue 
service may not have a complete understanding of the full range of available options, or may 
have experienced an issue that a retention representative can help solve. That is why a majority 
of customers who speak to a retention representative do not end up cancelling their service. 
Comca.st retention representatives are trained and evaluated on their ability to deliver a world- 
class customer experience. 

Q. One suggestion that has been made by consumer advocates is to have a cable or 
satellite TV subscriber “bill of rights,” much like the Department of Transportation’s 
passenger protections for airline passengers, where consumers are guaranteed a certain 
level of customer service. Given that Comcast has declared its commitment to a high 
standard of customer service, would Comcast oppo.sc .such a “bill of rights”? 

Comcast wants every customer to have an exceptional experience — from the moment 
they order a new service, to installation, to the way Comcast communicates with them and bills 
them for service, to how Comcast responds to issues. As Mr. Karinshak noted in his testimony, 



189 


Comcast customer service already has its own internal guiding principles that it uses as part of its 
customer service revamp, which include: 

• Investing in Training and Technology for all Employees. 

• Giving All Customers Access to Products and Services that Work Best For Them. 

• Ensuring a Fair Price for All of Our Customers. 

• Being on Time and Minimizing Wait Time, All the Time. 

• Giving Customers Control over Their Comcast Experience by Enabling Self Service 
Whenever Possible. 

• Keeping Bills Simple and Tran.sparent. 

• Reassessing Policies and Fees That Frustrate Customers. 

• Crediting Customers Proactively for Outages and Billing Errors. 

• Allowing Customers to End Their Service Without a Hassle. 

• Measuring Our Employees on Customer Satisfaction. 

Mr. Karinshak testified that he considers these guidelines akin to a “customer bill of 
rights.” Comcast cannot commit to supporting an externally-mandated customer bill of rights 
without reviewing the substance of the proposal but will commit to conducting such a review in 
good faith and working with the Subcommittee on policy concerns that relate to customer 
service, 

Q: What steps is Comcast taking to more effectively communicate how fees are charged 

on a customer’s bill? 

As noted, Comcast has launched its video bill, which is a short, personalized video that 
explains everything customers need to know about their bill, including information about all fees 
and regulatory charges. See COMCAST-PSI-00000103. New customers and customers 
changing their service package also receive a detailed e-mail summary of their new bill, 
including all fees and other charges. 

In an effort to provide further tramsparency to customers regarding its billing process, 
Comcast also maintains a customer-facing website designed to help customers understand their 
monthly bill by providing a guide to its different sections. The website also contains a section 
describing the government taxes, fees, and surcharges on customers’ bills. The website can be 
accessed at http:/7cuslonier . xfinitY.com/help-and-supDo rt/billing/understand-vour-bi 1 1/ . 

Comcast is also in the final stages of working on a revamp to its customer bills that it 
hopes will further clarify to customers how fees are charged. 



190 


Q. Docs Comcast plan to make any changes to clearly present the distinction between 
discretionary surcharges and government-mandated taxes or regulatory fees on a 
customer’s bill? If so, w'hat changes will be made and when will they be implemented? 

As Mr. Karinshak noted in his testimony, Comcast currently places discretionary 
surcharges in its “Other Charges & Credits” section of the bill, which is separate from the 
“Taxes, Surcharges, & Fees” section dedicated to government-inandated taxes or regulatory fees. 
See, e.g., COMCAST-PSl-OOOl 1087. This is a clear distinction between those charges that are 
discretionary and those that are pursuant to taxes and regulatory assessments. 

Q. Comcast advertisements do not include the post-promotional price that customer’s 
pay when their first or second year of service ends or their promotion rolls off, unless it is 
plaeed in the fine print. Docs Comcast plan to include this information in advertisements 
in the future? 

Comcast advertisements state that after a promotional period its regular rates in the 
market will apply. Comcast cannot know with certainty what it will be charging in a particular 
market years in advance and therefore cannot include the price that a customer will pay at the 
conclusion of their promotion. 



191 


Appendix A 


Comcast Q2 2016 Promotional Pricing 



Bundle 

Wee 

Year 2 Price 

West 

Perfonnance 25 + Saver 

$49.99 (2-y^ contract) 

$59.99 (l-year contract) 

$49.99 (2-year contract) 

$69,95 


Performance 25 + UL 

$59.99 (2-year contract) 

$69.99 { l-year contract) 

$59.99 (2-ycar contract) 

$79.95 


Starter SPDC 

$89.99 (no contract) 

$79.99 (contract) 

$69.99 (contract w/sale) 

5 1 09.99 (no contract) 

599.99 (contract) 

$89.99 (contract w/sa!e) 


Preferred SPDP 

$99.99 (no contract) 

$89.99 (contract) 

$119,99 (no contract) 

$109.99 (contract) 


Starter TP 

$109.99 (no contract) 

$99.99 (contract) 

$89.99 (conO’act sale) 

$134.99 (no contract) 

$124.99 (contract) 

SI 14.99 (contract sale) 


Preferred TP 

S 1 1 9.99 (no contract) 

$109.99 (contract) 

$144.99 (no contract) 

$134.99 (contract) 


HD Preferred TP 

$129.99 (no contract) 

SI 19.99 (2-year contract) 

$154.99 (no contract) 

$1 19.99 (2-year contract) 


HD Preferred Plus TP 

$ 1 49.99 (no contract) 

$ 1 39.99 (2-year contract) 

$174.99 (no contract) 

$139.99 (2-year contract) 


HD Premier TP 

$169.99 (no contract) 

S 1 59.99 (2-ycar contract) 

$194.99 (no contract) 

$159.99 (2'year contract) 


HD Complete TP 

$209.99 (no contract) 

$ 1 99.99 (2-year contract) 

$234.99 (no contract) 

$199.99 (2-year contract) 

Central 

Starter DP 

$99.99 (no contract) 

$89.99 (2-year contract) 

$109,99 (no contract) 

$89,99 (contract) 


Preferred DP 

$119.99 (no contract) 

$ 1 09.99 (2-ycar contract) 

$129.99 (no contract) 

$109.99 (2-ycar contract) 


Preferred Plus DP 

$139.99 (no contract) 

S 1 29.99 (2 -year contract) 

$149.99 (no contract) 

$129.99 (2-year contract) 


Premier DP 

$ 1 59.99 (no contract) 

$149.99 (2-year contract) 

$169.99 (no contract) 

S149.99 (2-ycar contract) 


Staner TP 

$ 1 09.99 (no contract) 

$99.99 (2-year contract) 

$129.99 (no contract) 

$99.99 (2-year contract) 


HD Preferred TP 

$ 1 29.99 (no contract) 

S 1 1 9.99 (2-year contract) 

$149.99 (no contract) 

$l 19.99 (2-year contract) 




192 



Buiutlc 

Year 1 Price 

Year 2 Price 


HD Preferred Plus TP 

S149.99 (no contract) 

$ 139.99 (2-year contract) 

$169.99 (no contract) 

S 1 39,99 (2 -year contract) 


HD Premier TP 

$169.99 (no contract) 

SI 59.99 (2-ye^ contract) 

$189.99 (no contract) 

$159.99 (2 -year contract) 

North 

Starter TV + Performance 

HSD 

$89.99 (no contract) 

$79.99 (contract) 

$109.99 {no contract) 

$99.99 (contract) 


Preferred + Pro + SHO SPDP 

$99.99 (no contract) 

$89.99 (contract) 

$1 19.99 (no contract) 

$109.99 (contract) 


Starter TP 

$99,99{no contract) 

$89.99 (contract) 

$124.99 (no contract) 

$11 4.99 (contract) 


Preferred TP 

$1 19.99 (no contract) 

$109.99 (contract) 

S144.99 (no contract) 

$134.99 (contract) 


HD Preferred TP 

$ 1 29.99 (no contract) 

$ 1 1 9.99 (contract) 

$154.99 (no contract) 

$144.99 (contract) 


HD Preferred Pius TP 

$149.99 (no contract) 

$139.99 (contract) 

$174.99 (no contract) 

$164.99 (contract) 


HD Premier TP 

$159.99 (no contract) 

$ 1 59.99 (2 -year contract) 

$184.99 (no contract) 

$159.99 (2-year contract) 


HD Complete TP 

$199.99 (no contract) 

S 1 99.99 (2-year contract) 

$224.99 (no contract) 

$ 1 99.99 (2-year contract) 

Vesta 

Performance Pro 

$39.99 (2-year contract) 

$39.99 (2-year contract) 


Blast Starter/2475 DP 

$79.99 (2-ycar contract) 

$99.99 (2-year contract + 250M) 

$79.99 (2-year contract) 

$99.99 (2-year contract + 250M) 


Extreme Premier/2725 DP 

$109.99 (2-year contract) 

S 1 29.99 (2-year contract + 250M) 

$109.99 (2-year contract) 

$129.99 (2-year contract + 250M) 


Blast Starter/3475 DP 

$99.99 (2-year contract) 

$1 19.99 (2-year contract + 250M) 

$99.99 (2-year contract) 

Si 19.99 (2-year contract + 250M) 


Extreme Premier/3725 DP 

$ 1 29.99 (2-year contract) 

$149.99 (2-year contract + 250M) 

$ 1 29,99 (2-year contract) 

$149.99 (2-year contract + 250M) 

New Mexico 

Dev/200 Latino + Perf Starter 
DP 

$49.99 (no contract) 

$69.90 (no contract) 


Dev/200 Latino + Perf Starter 
DP + Saver TP 

$69.99 (no contract) 

$89.90 (no contract) 

Frontier 

Performance 25 

$19.99 (2 -year contract) 

$19.99 (2-year contract) 


Performance Pro 

$ ! 5.00 (2-year contract) 

S 1 5 .00 (2-year contract) 


Blast Pro 

$30.00 (2-year contract) 

$30.00 (2-year contract) 



193 



Bundle 


Year 2 Price 

Zenith 

Extreme 250M 

$50.00 (2-year connect) 

$50.00 (2-year contract) 


5M 

S9.95 

$9.95 


Extreme 250M DP 

$70.00 (3-year contract) 

$70.00 (3-year contract) 

Big South/ 

Starter Video 

$39.99 (2-year contract) 

$39.99 (2-year contract) 

Florida 

Performance 

$29.99 (1-year contract w/ecobilt) 



Blast 

$39.99 (1-year contract w/ecobiil) 



Internet Pius 

$39.99 (1-year contract w/ecobill) 



Internet Plus w/Blast choice of 
SHO orHBO 

$49.99 (1-year contract w/ecobi!l) 

$29.95 


Starter Blast SPDP 

$69.99 (2-year contract) 

$69.99 (2 -year contract) 


Preferred Blast SPDP 

$79.99 (2-year contract) 

$79.99 (2 -year contract) 


Starter TP 

$89.00 (2-year contract) 

$89.00 (2-year contract) 


HD Preferred TP 

$99.00 (2-year contract) 

$99.00 (2-year contract) 


Comcast Q3 2016 Promotional Pricing 


Division 

Bundle 

■■■■■KTRniSnMMHHMi 

$ L u 2 Piuc 

West 

Performance 25 >• Saver 

$49.99 (2-year contract) 

$59.99 { 1 -year contract) 

S49.99 (2-year contract) 

$69.95 


Performance 25 + UL 

$59.99 (2-year contract) 

$69.99 ( 1 -year contract) 

$59.99 (2-year contract) 

$79.95 


Starter SPDC 

$89.99 (no contract) 

$79.99 (contract) 

$69.99 (contract w/sale) 

$109.99 (no contract) 

$99.99 (contract) 

$89.99 (contract w/sale) 


Preferred SPDP 

$99.99 (no contract) 

$89.99 (contract) 

SI 19.99 (no contract) 

$109.99 (contract) 


Starter TP 

$109.99 (no contract) 

$99.99 (contract) 

$89.99 (contract sale) 

$134.99 (no contract) 

$124.99 (contract) 

$ 1 1 4.99 (contract sale) 


Preferred TP 

SI 19.99 (no contract) 

$109.99 (contract) 

$144.99 (no contract) 

$134.99 (contract) 


HD Preferred TP 

$129.99 (no contract) 

Si 19.99 (2- year contract) 

$154.99 (no contract) 

$ 1 1 9.99 (2-year contract) 




194 


Division 

Bundle 

Year 1 Price 

Year 2 Price 


HD Preferred Phis TF 

5149.99 (no contract) 

5 1 39.99 (2-year contract) 

SI 74.99 {no contract) 

$139.99 (2-year contract) 


HD Premier TP 

$ 1 69.99 (no contract) 

$1 59.99 (2-year contract) 

$194.99 (no contract) 

S 1 59.99 (2-year contract) 


HD Complete TP 

$209.99 (no contract) 

$199.99 (2-year contract) 

$234.99 (no contract) 

S199.99 (2-yea!' contract) 

Central 

Starter DP 

$99.99 (no contract) 

$89.99 (2-year conft-act) 

$109.99 (no contract) 

$89.99 (contract) 


Preferred DP 

$ 1 1 9.99 (no contract) 

$109.99 (2-year contract) 

SI 29.99 (no contract) 

$109.99 (2-year contract) 


Preferred Plus DP 

$ 1 39.99 (no contract) 

SI29.99 (2-year contract) 

$149.99(00 contract) 

SI 29.99 (2-year contract) 


Premier DP 

S 1 59.99 (no contract) 

$ ! 49.99 (2-year contract) 

$169.99 (no contract) 

$149.99 (2-year contract) 


Starter TP 

$ 1 09.99 (no contract) 

$99.99 (2-year contract) 

$129.99 (no contract.) 

$99.99 (2-year contract) 


HD Preferred TP 

S129.99 (no contract) 

$ 1 1 9.99 (2-year contract) 

$149,99 (no contract) 

$ 1 1 9.99 (2-year contract) 


HD Preferred Plus TP 

$149.99 (no contract) 

$139.99 (2-year contract) 

$169,99 (no contract) 

$139,99 (2-year contract) 


HD Premier TP 

$169.99 (no contract) 

$159.99 (2-year contract) 

SI 89.99 (no contract) 

$159.99 (2-year contract) 

North 

Starter TV + Perfomiance 

HSD 

$89.99 (no contract) 

$79.99 (contract) 

SI 09.99 (no contract) 

$99.99 (contract) 


Preferred t Pro + SHO SPDP 

$99.99 (no contract) 

$89.99 (contract) 

SI 19.99 (no contract) 

$109.99 (contract) 


Starter TP 

$99.99(no contract) 

$89.99 (contract) 

$124.99 (no contract) 

$1 14.99 (contract) 


Preferred TP 

$1 19.99 (no contract) 

$109.99 (contract) 

$144.99 (no contract) 

$134.99 (contract) 


HD Preferred TP 

$129.99 (no contract) 

$11 9.99 (contract) 

$154.99 (no contract) 

$144.99 (contract) 


HD Preferred Plus TP 

$149.99 (no contract) 

$139.99 (contract) 

$174.99 (no contract) 

$164.99 (contract) 


HD Premier TP 

$169.99 (no contract) 

SI 59.99 (2-year contract) 

$ 1 94.99 (no contract) 

S159.99 (2-y'ear contract) 




195 



Bundle 

^ (Ml 1 PlUV 

, Year 2 Price 


HD Complete TP 

S 199.99 (no contract) 

Si 99.99 (2-year contract) 

$224.99 (no contract) 

$199.99 (2-year contract) 

Vesta 

Performance Pro 

S39.99 (2-year contract) 

$39.99 (2-year contract) 

Blast Starter/2475 DP 

$79.99 (2-year contract) 

$99.99 {2-year conu-act + 250M) 

$79.99 (2-year contract) 

$99.99 (2-year contract + 250M) 


Extreme Premier/2725 DP 

$109.99 {2-year contract) 

$129.99 (2-year contract + 250M) 

$109.99 (2-year contract) 

$129,99 (2-year contract + 250M) 


Blast Starter/3475 DP 

$99.99 (2-year conti'act) 

$1 19.99 (2-year contract + 250M) 

$99.99 (2-year contract) 

$ 1 1 9.99 {2-year contract + 250M) 


Extreme Premier/3725 DP 

$129.99 (2-year contract) 

$149.99 (2-year contract + 250M) 

$129.99 (2-ycar contract) 

$149.99 (2-year contract + 250M) 

New Mexico 

Dev/200 Latino + Perf Starter 
DP 

$49.99 (no contract) 

$69.90 (no contract) 


Dev/200 Latino + Perf Starter 
DP + Saver TP 

$69.99 (no contract) 

$89.90 (no contract) 

Frontier 

Performance 25 

$ 1 9.99 (2-year contract) 

$19.99 (2-year contract) 


Performance Pro 

$15.00 (2-year contract) 

SI 5.00 (2-year contract) 


Blast Pro 

$30.00 (2-year contract) 

$30,00 (2-year contract) 

Zenith 

Extreme 250M 

$50.00 (2-year contract) 

$50.00 (2-year contract) 


5M 

$9.95 

$9.95 


Extreme 250M DP 

$70.00 (3-year contract) 

S70.00 (3-year contract) 

Big South/ 

Starter Video 

$39.99 (2-year contract) 

$39.99 (2-year contract) 

Florida 

Performance 

$29.99 (1 -year contract w/ccobiU) 



Blast 

$39.99 ( 1 -year contract w/ecobill) 



Internet Plus 

$39.99 (1-year contract w/ecobill) 



Internet Plus w/Blast choice of 
SHO or HBO 

$49.99 ( 1 -year contract w/ecobil!) 

$29.95 


Starter Blast SPDP 

$69.99 (2-year contract) 

S69.99 {2-year contract) 


Preferred Blast SPDP 

$79.99 (2 -year contract) 

$79.99 (2-year contract) 


Starter 'I'P 

$89.00 (2-year contract) 

$89.00 (2-year contract) 


HD Preferred TP 

$99.00 (2-year contract) 

$99.00 (2-year contract) 




196 


Post-Hearing Questions for the Record 

Submitted to Tom Karinshak, Senior Vice President, Customer Service, Comcast 
From Sen. Tammy Baldwin 

“Permanent Subcommittee on Investigations: Customer Service and Billing Practices in 
the Cable and Satellite Television Industry” 

June 23, 2016 

1. I understand the need for Comcast to evolve and target the millennial audience 
who may prefer to only purchase internet service and stream shows online rather 
than purchasing cable and internet services bundled together. Hosvever, as you 
are unbundling internet and providing streaming services for them, it is also 
imperative that you unbundle services to address the needs of older populations. 
Specifically, I hear from constituents who don’t want to purchase internet in 
order to get a better deal on TV and phone when they don’t even own a 
computer. Additionally, online account management services arc fruitless if a 
customer doesn’t own a computer. 

What is Comcast doing specifically to address the needs of older populations to 
ensure they have the service they desire and have customer care that actually 
helps address their concerns? 

Comcast greatly values its senior cu.stomers and is committed to providing them with 
choices that they find appealing. Comcast trains its representatives to match 
customers with the best possible set of products and services that will meet their needs 
and their budget. For senior citizens who would prefer not to receive internet services, 
Comcast offers standalone TV and phone services, including lower priced plans, as 
well as TV/phone bundles that offer customers value without purchasing internet 
access. 

Comcast also offers a variety of other programs designed especially for seniors. For 
example, Comcast has introduced a Seasonal Convenience Plan for part-time residents 
who choose to spend the winter months away from home; the program allows 
customers to put services on hold from 90 to 270 days with no reconnection charge 
and no service call upon return.' Comcast is also piloting an extension of its “Internet 
Essentials” program, which has connected more than 2 million low-income senior 
citizens to online access at home.^ 

2. I often hear from Wiscon.sinitcs living in rural areas about the challenges they 
face in acces.sing a range of telecommunications services. As you know, 
broadband Internet access is becoming a necessity for conducting business, 
accessing critical services like telemedicine and government benefits programs 


^ https://conicastseasonai.com/ . 

~ llt.t.p:././corporate.comcast.com./news-inFormation/ncws-leed/coincast-cxtcnds-internet-es.sentials-to-!Q\v-income- 
senior-citizens-hi-san-francisco . 



197 


and simply staying informed. I also understand that there are significant costs 
involved in bringing these services to less-populated areas and I have strongly 
supported government efforts to facilitate that infrastructure development. 

What is Comcast doing to ensure its products and services are available to 
individuals in rural areas across this country - and at comparable cost and 
quality to that provided to urban and suburban customers? 

Comcast has been an industry leader in expanding broadband access to the rural 
communities in its .service footprint. For example, in one state, Comcast has already 
built out its broadband network in areas with a population density as low as 15 homes 
per mile in rural communities and, in conjunction with local franchise authorities, has 
extended its plant to serve additional homes in low-density rural areas. 

Comcast's broadband network continues to grow. In 2013, Comcast expanded its 
existing broadband network by 2,381 miles.^ In addition Comcast extended its 
broadband plant to 296,744 additional homes in 2013, bringing the cumulative number 
of additional homes passed to 7 1 8,5 1 1 

Further, in connection with the 201 I FCC NBCUniversal Transaction Order regarding 
Comcast’s Joint venture with NBC, Comcast was required to upgrade internet service 
for at least six rural communities in 201 1 Comcast exceeded this requirement, 
upgrading its infrastructure to provide broadband internet service to 33 rural 
communities.*' All of these rural communities now have infrastructure that can 
provide access to all Xfinity internet speed tiers, in addition to video service.^ 


3. I have long been a supporter of preserving consumers’ access to critical local 
programming - from town and county government meetings, to school programs, 
to locally-produced cultural content -through the availability of public, 
educational and government access, or PEG, channels. Federal law allows local 
franchising authorities to require cable operators to set aside channels for these 
uses. Unfortunately, the increasing move to statewide franchise agreements has, 
in many cases, severely reduced or even eliminated funding for PEG channels. I 
have introduced legislation, the Community Access Preservation (CAP) Act, to 
address that issue. 

How is Comcast ensuring that its customers have access to these important 
sources of local content in a way that is easy for them to find? 


■ .bMaairBorate.corn casl.com/iiTi.igcs/MB- 1 0-56-C-NDCU-Annual-Comp|iaiice-Rei-iort-7.n 1 1-701 4-07-78 ndf 

’ M 

’ http://cor porate.conicast-coni/imaves/FCC-Order-0[vNBClj.p (1f. 

‘,hUp://corporale,cqnicast.coni/ini age5/C-N'BCU-Annual-Renott-lo-the-FCC-n2-?.}l-?.ni7.-with-App<;ndices sin. pdf . 



Comcast has consistently demonstrated a commitment to PEG channels. For instance, 
in connection with the NBCUniversal merger, Comcast committed to and performed 
innovative work with the PEG community by exploring additional means of making 
these important channels available. From February 201 1 to January 2014, Comcast 
conducted a series of Video on Demand (“VOD”) and Online PEG trials in five pilot 
communities.* Under this highly successful program, Comcast hosted nearly 600 
segments of PEG on demand, generating nearly 50,000 views across the pilot 
communities through December 2013.’ The online content, which was made available 
to both Comcast customers and non-customers, received over 350,000 unique visitors 
and nearly 1.2 million page views."' 


® http://corporate.comcast.eom/images/Comcast-PEG-PiIot-Prograin-Report-20l4-0l-28 pdf 

■’ ki 



199 


Questions for the Record 
Senate Cory A. Booker 

Senate Committee on Homeland Security and Governmental Affairs 

Questions for the Record - “Customer Service and Billing Practices in the Cable and 

Satellite TV Industry” 

Hearing held on Thursday, June 23, 2016 


Question for Mr. Tom Karinsliak, Senior Vice President of Customer Service for Comcast 

Question 1: Mr. Karinshak, since November there has been an ongoing dispute between 
Comcast and the Yankees Network, YES. Approximately 500,000 consumers in New Jersey 
are being denied access to a sports channel that many purchased cable service specifically 
to access. It is estimated that the TES channel accounts for around S5 of a consumer’s 
monthly cable bill. It doesn’t seem fair that my constituents are caught in the crossfire of 
this ongoing business negotiation without any recourse or reimbursement. 

Question la: Given that this dispute is still ongoing, do you believe that affected consumers 
should be granted a discount or reimbursement since they arc apparently not receiving all 
of the programming they continue to pay for? 

FOX and the Yankees were asking all of Comcast's New York-area customers who 
received the channel to pay them hundreds of millions of dollars over the next .several years to 
continue receiving YES Network. YES is already the most expensive RSN in America and 
simply did not present an appropriate price-value proposition for Comcast customers given the 
network’s minimal vievvership, which is why Comcast decided that it could no longer justify 
carrying the network, 

Comcast tries to defray the costs of the RSNs it carries through a Regional Sports Fee ($3 
for customers receiving Digital Starter service tiers and above or MultiLatino 450 service). 
However, that fee covers only a small percentage of the total costs of all of the RSNs in any 
market. RSN fees where customers receive YES Network amount to approximately $9, and the 
RSN fee Comcast charges its customers in that area covers only approximately 30% of the costs 
of the RSNs In those markets, even without the cost of YES, 

It remains Comcast's hope to bring back YES to its customers. But, Comcast can only do 
that if FOX becomes realistic with its price demands. The excessiveness of FOX’s demands is 
confirmed by the fact that Comcast is not the only distributor who has not agreed to pay these 
fees. For example, Dish also does not carry YES. 


200 


Response of Charter Communications, Inc. 

To Question for the Record Posed by Senator.s Rob Portman and Claire McCaskill 
Following the Subcommittee Hearing on 

“Cnstomer Service and Billing Practices in the Cable and Satellite Television Indnstry” 

June 23, 2016 


1. The Subcommittee’s joint staff report detailed deficiencies in the refund policies of both 
Time Warner Cable and Charter Communications, which have since merged with each other. 
Our investigation found that neither company provided full refunds to customers who had 
been overcharged for equipment, nor did they notify customers found to have been 
overcharged. Specifically, we discovered that Time Warner Cable overbillcd more than 
40,000 Ohioans and more than 4,200 Missourians in 20 1 5. along with up to 11 ,000 more 
Ohio customers so far in 2016. Charter estimated that it overcharges more than 5,800 
Missouri customers a total of $494,000 each year. 

Having acquired Time Warner Cable, Charter is now responsible for ensuring that Ohio and 
Missouri customers who receive inaccurate bills can count on having those mistakes fully 
and quickly corrected. At a minimum, we believe the company should at least inform all 
subscribers who have been overbilled that they may be owed refunds — including the 40,000 
Ohio customers and 4,200 .Missouri customers overbilled last year. To that end, please 
advi.se the Subcommittee whether you intend to notify Charter and legacy Time Warner 
Cable customers know'll to have been overcharged and fully refund the equipment 
overcharges they have paid. Please describe in detail the additional steps you plan to take to 
those ends. 

Response : As explained in the testimony of Kathleen Mayo at the June 23rd hearing, 
Charter has notified legacy Charter customers known to have been subject to billing 
errors, and has issued a 12-month credit to those customers for those equipment fees. 

For any legacy TWC customers identilied as being subject to billing errors in October 
2015 as part of TWC’s billing reconciliation process, Charter will also issue those 
customers a 12-month credit for any erroneous equipment fees. For any legacy TWC 
customers identified after October 2015 as part of TWC’s monthly reconciliation 
process. Charter will issue a credit for the period of the identified overcharge. Charter 
will notify these legacy TWC customers that they were subject to billing errors via a 
me.ssage in the bill that contains their credit. 

After having been notified of the billing errors and receiving a credit, if any legacy 
Charter or TWC customer contacts Charter and believes that they have not been 
provided a sufficient credit, we will work with those customers on an individual basis to 
research the problem and ensure that the customer receives the appropriate credit. 

Charter is committed to putting proces.ses in place to ensure that these billing errors do 
not occur in the future. For legacy Charter customers, as Ms. Mayo noted in her 
hearing testimony, the company has already instituted a daily process to catch any 



201 


mismatches and reconcile those charges no more than 24 hours after they occur. 
Charter also is in the process of putting the same controls in place in the legacy TWC 
billing systems, which it expects to complete in September 2016. 



202 


Responses of Charter Communications, Inc. 

To Questions for the Record Posed by Senator Tammy Baldwin 
Following the Subcommittee Hearing on 

“Customer Service and Billing Practices in the Cable and Satellite Television Industry” 

June 23, 2016 

i . 1 understand the need for Charter to evolve and target the millennial audience who 
may prefer to only purchase internet service and stream shows online rather than 
purchasing cable and internet services bundled together. However, as you are 
unbundling internet and providing streaming services for them, it is also imperative 
that you unbundle services to address the needs of older populations. Specirically, I 
hear from constituents who don't want to purchase internet in order to get a better deal 
on TV and phone when they don’t even own a computer. Additionally, online account 
management services are fruitless if a customer doesn’t own a computer. 

What is Charter doing specifically to address the needs of older populations to ensure 
they have the service they desire and have cu.stomer care that actually helps address 
their concerns? 

Response : Charter values all of its customers including the elderly. To address 
the needs of elderly customers, Charter has implemented a number of customer 
service options. These include large-print billing statements and large-button 
remotes, which are available on demand. In addition, customers can call (855) 
757-7328 to pay a bill using Charter’s automated phone system as opposed to 
paying online. For those who prefer to pay their bill in person, legacy Charter 
has more than 250 stores in locations across its footprint. 

Charter is particularly concerned about low-income seniors and their ability to 
access affordable broadband services. To this end, Charter is in the process of 
rolling out a low-income broadband offering of 30 Mbps for S14.99/month, which 
will be available to seniors receiving Supplemental Security Income. This 
offering will make broadband services more affordable to low-income seniors and 
encourage them to take advantage of the growing medical and social online 
opportunities. 

With respect to bundled services. Charter’s strategy is to offer a full range of 
video, broadband and phone services to its customers. Because providing 
multiple services is more efficient and economical, Charter is able to offer lower 
prices to consumers for such bundled offerings. We understand that not all of 
our customers want to purchase multiple services, and therefore Charter does 
offer its video and broadband services on an individual basis. The individual 
services arc competitively priced and Charter must aggressively compete with 
multiple video providers in every market it serves. Charter believes that offering 
a high quality service, at competitive rates combined with excellent customer 
service is the best way to attract and retain customers, including older customers. 



203 


1 often hear from Wisconsinites living in rural areas about the challenges they face in 
accessing a range of telecommunications services. As you know, broadband Internet 
access is becoming a necessity for conducting business, accessing critical services like 
telemedicine and government benefits programs and simply staying informed. I aLso 
understand that there are significant costs involved in bringing these services to less- 
populated areas and 1 have strongly supported government efforts to facilitate that 
infrastructure development. 

What is Charter doing to ensure its products and services are available to individuals 
in rural areas across this country - and at comparable cost and quality to that provided 
to urban and suburban customers? 

Response : Charter’s strategy is to offer high-quality services that are better than 
our competitors’ and to price them competitively, eliminating many of the 
common fees in the industry to simplify bills and avoid “bill shock.” In legacy 
Charter’s footprint, we established a national uniform retail rate pricing (“Rack 
Rates”), which has the effect that consumers across our footprint get the benefit 
of the pricing in the most competitive local market. As a result, standard rates 
for Charter customers are the same for each tier of service and bundle of sendees 
regardless of whether they live in a rural or suburban area. Occasionally, 
Charter offers regional promotions such as “back to school” promotions near 
colleges, but in such circumstances, at the end of the promotion period, Charter’s 
promotional pricing transitions to the same national uniform retail rates. 
Charter intends to implement this marketing approach across legacy TWC and 
BHN territories over time. As part of the Company’s merger. Charter plans to 
bnild out its networks beyond where it is currently providing service, including 
into rural or underserved areas. 

2. 1 have long been a supporter of preserving consumers’ access to critical local 

programming - from town and county government meetings, to school programs, to 
locally-produced cultural content - through the availability of public, educational and 
government access, or PEG, channels. Federal law allows local franchising authorities 
to require cable operators to set aside channels for these uses. Unfortunately, the 
increasing move to statewide franchise agreements has, in many cases, severely 
reduced or even eliminated funding for PEG channels. I have introduced legislation, 
the Community Access Preservation (CAP) Act, to address that issue. 

How is Charter ensuring that its cu.stomers have access to these important sources of 
local content in a way that is easy for them to find? 

Response : Charter is proud of its record supporting local programming efforts. 
Charter meets all PEG programming commitments contained in its local and 
state franchises and complies with not only the letter but the spirit of the Cable 
Act during franchise renewal negotiations with respect to designation of channel 
capacity for PEG programming as well as equipment funding and other 
community support based on community needs. 



204 


Wc provide capacity and funding in thousands of communities throughout the 
United States and last year remit hundreds of millions of dollars in franchise fees 
to state and local franchising authorities, in addition to disbursing PEG fees, also 
in the millions of dollars to those communities with active PEG channels. 
Charter has strong relationships with the vast majority of its PEG providers and 
a history of working collaboratively with PEG organizations to meet its franchise 
commitments. 

Charter agrees that PEG programming should be easy for consumers to find and 
access. To that end, Charter typically carries PEG programming on individual 
channels that arc grouped together in the channel lineup and therefore easier to 
find and accc.ss. Unlike some other providers. Charter does not place all PEG 
programming on a single channel. 



205 


Post-Hearing Questions for the Record 
Submitted to DirecTV 
PTom Senator Claire McCaskill 

“Customer Service and Billing Practices in the Cable and Satellite Television Industry” 

June 23, 2016 


Q. How does DirecTV inform customers who arc enrolled in automatic bill pay about 
changes to their bill, such as price increases and overcharges? 

Response: Whether or not a customer is enrolled in automatic bill pay, DIRECTV alerts the 
customer of price changes or overcharges as follows: 

• DIRECTV provides customers at least 30-days advance notice of annual price increases: 
by a notice appearing on the bill; by an additional bill insert (digitally if paperless); by 
email (if email is available and authorized by customer), DIRECTV also provides notice 
by separate letter in certain circumstances (e.g„ if DIRECTV service is jointly billed with 
services provided by a third-party partner). 

• DIRECTV notifies customers of the end of a promotional offer (“roll-offs") in the section 
of the bill entitled “What Changed Since Last Month”, which explicitly identifies 
changes from month-to-month. In addition, in the “Account Activity” section of bill, 
each promotional offer shows a “count down” of the months left (e.g., month 6 of 12). 

• In the month after a price increase (or end of a promotion), the “What Changed Since 
Last Month” section of the bill will indicate that there was a price change from the prior 
bill. 

• In instances where an overcharge is reflected in the customer’s billing 

statement, DIRECTV typically identifies the overcharge In the customer’s next billing 
statement and applies a credit to the customer’s account. This credit, described as a 
“Billing Adjustment,” appears on the customer's billing statement in the “Other Charges, 
Adjustments and Taxes” section, along with a description of the overcharge, in some 
cases (e.g., for larger credits), DIRECTV’S process is to issue a letter to the customer to 
provide more information regarding the overcharge and the reimbursement method, in 
addition to the notification on the bill. (See produced .sample letter at DTV-PSl- 
0055675). 

Q. What efforts has DirecTV made to understand whether customers are receiving 
adequate notice that their bill will change or that the cost of their package will increase? 

Response: DIRECTV regularly tracks customer satisfaction with its services and reasons for 
customer dissatisfaction, including billing. ' DIRECTV is committed to providing our customers 


Certain of DIRECTV’S efforts in this regard are discussed in the Minority Report at ,30-3 i . 



206 


with simple and understandable communications with respect to services and fees. In 2014, as 
part of the Customer Experience initiative, DIRECTV introduced a new simplified bill that 
identifies current fees and charges, changes from the previous month, and the number of months 
remaining on any promotional discounted rates. This change was a proactive, multi-year, multi- 
million dollar effort that involved significant resources across DIRECTV. The monthly bill also 
notifies consumers of impending price changes. DIRECTV also discloses prices and the terms 
of promotional offers during the sales call, on directv.com, in sales confirmation emails and 
letters, and on the customer’s monthly bill. Disclosures regarding program package prices in 
DIRECTV advertising also comply with the requirements of a multistate settlement agreement 
that DIRECTV entered into with the attorneys general of all 50 states and the District of 
Columbia in 2010. 

Q. Has DirecTV changed its billing notification practices related to price increases? If 
so, please describe the changes that have been made and when these changes were 
implemented. 

Response: In 2012, DIRECTV began including language in price change notifications that 
describe the reason for the price increase. 

In 2014, as part of its Customer Experience initiative, DIRECTV introduced a new simplified 
bill that not only identifies current fees and charges, but also changes from the previous month, 
and the number of months remaining on any promotional discounted rates. 

In 2016, DIRECTV introduced additional bill notifications in the month a price increase takes 
effect. DIRECTV now provides a unique price increase notification by bill insert (or email if 
authorized and available) for customers with promotional offers, in order to further clarify how a 
price increase would/would not impact their bills. 

Q. Please provide a list of all promotional offers available between June 1, 2016 and 
July 31, 2016 that are “roll to pay” or that require customers to affirmatively cancel when 
that promotion ends or face being charged for that programming or service on their next 
bill. For those promotions that are “roll to pay,” please indicate: 

(1) Whether customers can cancel the programming or service online or whether 
they must cancel over the phone. 

ResDon.se: See chart below. 


OflVrs 

Description 

Roll-to-Pav ^ 

( ancci 

Premium 

Channels 

3 free months of 
HBO, SHOW, 
STARZ& 

CINEMAX for new 
subscribers to the 
Select thru Ultimate 
programming 
package. 

RolJ-to-pay in month 4. 

Notification Method: 

Roil-to-pay disclosed at point of sale, 
in the order confirmation, and in 
account activity section of the bill, 
which shows a promotional “count 
down.” DIRECTV further notifies 

Customer may: 

Opt out at point of sale. 

Call to cancel anytime during 
promotional period. 

Call to schedule cancellation 
during promotional period 
(after service is activated). 

Call to cancel after promotion 




207 




customers of the end of a 
promotional offer in the section of 
the bill entitled “What Changed 

Since Last Month.” 

ends. DIRECTV provides 
customers a grace period to 
receive full refund of charges. 

Sports 

Offer 

NFL ST MAX 
included on 

CHOICE or higher 
programming. 
Packages in year 1 
(or MAS ULTRA or 
higher). 

Automatically renews beginning in 
year 2, 

DIRECTV customers who do not 
watch any NFL Sunday Ticket 
programming during this 
promotional period are not 
automatically renewed. 

Notification Method: 

Auto-renewal of sports offers are 
disclosed at point of sale and in the 
order confirmation. 

As customers approach their initial 
auto-renewal, additional notifications 
are sent with the DIRECTV bill, as 
follows: 

Legacy DTV bill: In the month 
before billing starts, DIRECTV 
provides notice that NFL Sunday 
Ticket is renewing. In the .same 
month, the customer’s bill will 
include a $0 line item for NFL 

Sunday Ticket. 

On the next month’s bill, that line 
will be populated with the applicable 
monthly NFL Sunday Ticket charge. 

In addition, the “What’s Changed 

Since Last Month” box of the bill 
will show that NFL Sunday Ticket 
has begun billing and the “Account 
Activity” of the bill will indicate that 
there has been a price change. 

Combined bill (DTV + AT&T 
Product): Thirty days prior to the 
auto-renewal, AT&T/DIRECTV 
provide the customer a letter and 
email (if email is available and 
authorized) reminding them of the 
start of the auto renewal, along with 
cancellation instructions. 

Customer may: 

Opt out at point of sale. 

Call to cancel anytime during 
promotional period. 

Call to schedule cancellation 
for year 2 (after service 
activated). 

V Cali to cancel any time prior to 
start of season in year 2. 

Cali to cancel after billing 
begins, up to start of NFL 
regular season. DIRECTV 
provides customers a grace 
period to receive full refund of 
renewal charges. 

’T Cancel in IVR, online or 

online chat for new DIRECTV 
customers who received 
complimentary NFL Sunday 
Ticket in year 1. 




208 


(2) Why Direc TV decided to make that promotion “roii to pay ” instead of “roii to 
drop. ” 

Response: With respect to both the premium channel offers and NFL Sunday Ticket 
offer, DIRECTV believes that requiring customers to call to continue to receive their 
services is not a good customer experience. If tliose customers who were enjoying 
the applicable programming forget to call, they would be disappointed if they found 
out that they are no longer getting the applicable channels. The promotional offers 
include what many customers consider “must have” programming. DIRECTV has 
also included numerous ways for the customers who do not want to “roll to pay” to 
avoid doing so — including, the ability to opt out at point of sale or during the 
promotional period (see chart above). 

Q. Are front line agents allowed to downgrade or cancel a customer’s service if they 
request it? 

Response: Front line call center agents can downgrade a customer’s base package, remove 
premium channels, and remove sports programming, if the customer reque.sts to cancel the entire 
service, a retention agent can assist with the complete cancellation.’ 

Q. Are customer service representatives penalized if they fail to ask why a customer is 
changing or cancelling their sendee? 

Response: DIRECTV’S goal is to resolve customer issues with solutions that address the “root 
cause” of the customer's problem. That is why DIRECTV trains it agents to ask customers 
que,stions to identify their underlying issue. For example, a customer may call DIRECTV to 
disconnect service because of economic circumstances. By engaging the cu-stomer, DIRECTV 
agents are able to make them aware of lower-priced plans that include the programming they 
most want at a price they can afford. That result is a "win/win” for both the customer and 
DIRECTV. In addition, it is important for DIRECTV to understand the reasons why customers 
are dissatisfied with their service. DIRECTV tries to identify recurring problems and ways to 
addre.ss them - to the benefit of all its customers. Customer service agents may be reprimanded 
and retrained if they repeatedly fail to ask customers questions to determine the “root cause” of 
their problem. 

Q. One suggestion that has been made by consumer advocates is to have a cable or 
satellite TV subscriber “bill of rights,” much like the Department of Transportation’s 
passienger protections for airline passengers, where consumers arc guaranteed a certain 
level of customer service. Given that DirecTV has declared its commitment to a high 
standard of customer service, would DirecTV oppose such a “bill of rights”? 

Response: Without being able to review specific language, DIRECTV cannot say what its 
position would be on such a legislative proposal. That said, the pay TV market is dynamic and 
rapidly evolving, with new players, besides traditional cable and satellite providers, entering the 
market and providing customers the programming they desire, e.g., NETFLIX, FlULU, Amazon, 

" May require transfer to a retention agent if not directly routed by the IVR. 



209 


Apple TV. Any static, mandated regulatory rules would likely be outpaced by these competitive 
forces and could serve to stifle innovation and potentially hamstring only a subset of competitors 
subject to those rules. In addition, existing federal and state law already provide effective 
consumer protections. These include; the FTC’s oversight of unfair and deceptive trade 
practices;^ the FCC’s enforcement of statutory privacy protections;'' and state consumer 
protection laws, typically enforced by state attorneys general. 

Q. What steps is DirecTV taking to more effectively communicate how fees are charged 
on a customer’s bill? 

Response: In 2014, as part of its Customer Experience initiative, DIRECTV introduced a new 
simplified bill that identifies current fees and charges. 

• The DIRECTV bill includes a separate section of the bill for equipment-related charges, 
which identifies (on a line-item basi.s) any equipment-related charges, such as the 
Advance Receiver Service fee. 

• Similarly, DlRECTV’s Regional Sports Fee (if applicable) is shown as a separate line- 
item on the bill. That fee is shown on the bill in the section entitled “Other Charges, 
Adjustments and Taxes.” 

Q. Does DirecTV plan to make any changes to clearly present the distinction between 
discretionary surcharges and government-mandated taxes or regulatory fees on a 
customer’s bill? If so, what changes will be made and when will they be implemented? 

Response: DIRECTV does not pass regulatory fees along to customers as separate “surcharges” 
on the bill. Thus, DlRECTV's bill does not have a separate bill .section for such surcharges. As 
noted, DIRECTV does assess a Regional Sports Fee. That fee is shown as a separate line-item 
on the bill in the section entitled “Other Charges, Adjustments and Taxes.” “Sales tax” also 
appears in this section, but such taxes are listed as a separate line item under a subsection clearly 
entitled “Taxes.” 

DIRECTV is continuously evaluating ways to improve the customer experience. We are 
currently designing a combined bill for customers with bundled AT&T/DIRECTV services. In 
designing that combined bill, we will review different alternatives to effectively communicate 
our fees and charges, taking into account learnings from both companies. 

Q. DirecTV customers with lower credit ratings were, under some circumstances, 
required to pay a fee at the time of installation, even when advertisements claimed that 
they would be given a “Free DirecTV System.” This fee was pre,sented to them not as a fee 
but as an opportunity because they “qualified” for an offer. Does DirecTV inform each 
customer subject to fees because of their credit rating that they are being charged a fee 
because of their credit score? 


■’ 15 U.S.C. g 45, 
‘47U.S.C. g,B8{i). 



210 


Response: Most DIRECTV offers for new customers feature equipment and installation at no 
additional charge, as well as introductory discounted program package pricing. These offers are 
generally available only to consumers who meet certain creditworthiness criteria. If a consumer 
does not meet the criteria, DIRECTV will make the offer available provided that the consumer 
makes an up-front payment of about $300. The consumer w'ill then receive a monthly bill credit 
up to the full amount of that up-front payment. This is disclosed to the consumer during the sales 
call if the credit check has indicated that the consumer does not qualify for the offer. 

Q. DirecTV customers with good credit ratings may qualify for free or reduced price 
equipment while customers with poor credit ratings may not receive the same 
discounts. Please provide a description of the offers available to customers with “good” or 
“high” credit ratings and the offers that are available to customers with “low” or “bad” 
credit ratings? 

Response; See response to question 10. If a consumer’s credit score does not qualify for the 
offer and the consumer does not want to make the up-front payment, the consumer can purchase 
the receiving equipment and pay for installation. 

Q. One DirecTV training document instructed agents to “de-escalate” upset customers 
in this way: “Like a matador, you must mentally ‘step aside’ and let the bull run past 
you... until it gets tired and calms down.” DTV-PSl-0089498 - 499 How have training 
mechanisms like this one contributed to customer satisfaction? 

Response: The use of the “matador” analogy in the training materials is unfortunate and is no 
longer in use. DIRECTV has produced thousands of pages of training materials for thousands of 
DIRECTV representatives. The pages cited do not reflect DIRECTV’S overall approach to 
customer service and sales and are no longer a part of how we do business. The referenced 
training guide instructs agents how to respond effectively and courteously to upset customers. 
The materials instruct the agent to actively listen to the customer and explains that upset 
customers are not “the ‘bad’ guys that attack for no reason, but who simply want to understand 
an issue . . . even if their first reaction is to get angry.” (DTV-PSl-0089499). 

Q. DirecTV advertisements do not include the post-promotional price that customer’.s 
pay when their first or second year of service ends or their promotion rolls off, unless it is 
in the fine print. Docs DirecTV plan to include this information in advertisements in the 
future? 

Response: DIRECTV has launched .some offers that feature a discounted price that lasts 
throughout the two-year agreement. In that instance, of course, the price does not change during 
the two-year agreement. DIRECTV continues to advertise offers that feature a discount for 
twelve months over a two-year agreement. Because package prices are subject to change, 
DIRECTV discloses the then-current monthly package pricing to consumers who sign up on 
directv.com and in its phone sales process. We also disclose that the price is subject to change, 
and escalating programming costs have necessitated price increases that cover a portion of 
DIRECTV’S increased programming costs. 



211 


Q. Our investigation revealed that some lower priced offers are only available to some 
customers over the phone, especially those wishing to cancel or downgrade their 
service. Do you plan to make these offers accessible to customers online or to customers 
who call asking for the lowest price option? 

Response: DlRECTV’s lowest price package is the Family package, priced at $29.99, although 
it is often more expensive than introductory pricing offered on other packages. The Family 
package is available on the DIRECTV website. Agents use the Family package as a retention 
offer if it meets the needs of the customer. 



212 


Post-Hearing Questions for the Record 

Submitted to Rasesh Patel, Senior Vice President, Product Management, AT&T 
Entertainment Group (DirecTV) 

From Sen. Tammy Baldwin 


f understand the need for DirecTV to evolve and target the millennial audience who 
may prefer to only purchase internet service and stream shows online rather than 
purchasing cable and internet services bundled together. However, as you are 
unbundling internet and providing streaming services for them, it is also imperative 
that you unbundle services to address the needs of older populations. Specifically, I 
hear from constituents who don’t want to purchase internet in order to get a better 
deal on TV and phone when they don’t even own a computer. Additionally, online 
account management services arc fruitless if a customer doesn’t own a computer. 

What is DirecTV doing specifically to address the needs of older populations to 
ensure they hav e the service they desire and have customer care that actually helps 
address their concerns? 

Response: DIRECTV is committed to providing all of its customers, including seniors, 
competitively priced services that meet their unique needs. This includes the offering of 
DIRECTV'S satellite TV services on a standalone basis. 

In addition, DIRECTV makes available its customer service agents to customers that wish to 
address their service issues over the phone. In fact, DlRECTV’s frontline call center agents 
speak with hundreds of thousands of customers every day regarding a wide range of inquiries 
and issues. Frontline call center agents receive extensive training concerning how to effectively 
and courteously communicate with every customer. In particular, DIRECTV trains its agents to 
listen to customers and ask them clarifying questions so that the agent can extend an offer to the 
customer based on their unique and individual needs. DIRECTV has also introduced step-by- 
step trouble shooting instructions, with pictures, that can be accessed via the set-top-box, thereby 
avoiding the need for customers to go on line to obtain this information. 


I often hear from Wisconsinites living in rural areas about the challenges they face 
in accessing a range of telecommunications services. As you know, broadband 
Internet access is becoming a necessity for conducting business, accessing critical 
services like telemedicine and government benefits programs and simply staying 
informed. 1 also understand that there are significant costs involved in bringing 
these services to less-populated areas and I have strongly supported government 
efforts to facilitate that infrastructure development. 

What is DirecTV doing to ensure its products and services are available to 
individuals in rural areas across this country - and at comparable cost and quality 
to that provided to urban and suburban customers? 



213 


Response: DlRECTV’s satellite TV services are provided across the country, including in rural 
areas, at the same quality, with the same richness of content, and at the same base package 
price(s). Taxes and fees may differ in a given area, however. For example, DIRECTV does not 
assess a Regional Sports Fee in all areas of the country. 



214 


Post-Hearing Questions for the Record 
Submitted to Dish Network 
From Senator Claire McCaskill 

“Customer Service and Billing Practices in the Cable and Satellite Television Industry” 

June 23, 2016 


1. How does Dish inform customers who are enrolled in automatic bill pay about 
changes to their bill, such as price increases and overcharges? 

Response: At the time of sale, DISH focuses on trying to ensure that the customer 
understands the products and services they arc receiving and all of the associated costs, 
DISH has several ways to proactively inform customers of pending price changes on their 
bill, including on the bill itself, emails, text messages, and set-top box pop-ups. ' 

2. What efforts has Dish made to understand whether customers are receiving 
adequate notice that their bill will change or that the cost of their package w ill 
increase? 

Response: DISH prides itself on transparency and strives to provide clear, consistent 
communications to its customers. Customers can access their account information via 
phone, text, paper bills, and the DISH website, DISH has worked continuously to 
improve the quality and clarity of our bills, and today DISH ranks highly on customer 
satisfaction surveys and reports for ease of understanding of the bill, DISH also answers 
many customer billing questions on our website.^ If a customer changes their service, 
they will get a text or email along with their new bill, indicating the new monthly 
amount. 

3. Has Dish changed its billing notification practices related to price increases? If so, 
please describe the changes that have been made and when these changes were 
implemented. 

Response: DISH has worked consistently to enhance communications with our 
customers about pending price increases.^ Aside from sending customers notice on the 


' See “Credit Roll Off Example. PNG,” “One-Time Fee Example. PNG,” “Prorated Charges 
Example. PNG,” “RTP Charges Example. PNG,” produced to Committee staff on June 7, 2016 
(examples of customer pricing disclosures). 

* See DISH Support, "Understanding Charges and Credits,” 
https://www.mydish.com/support/billing/undcrstanding-charges-credits. 

’ See “New Connect Work Order Created.pdf.” produced to PSI station May i I, 2016 (sample 
email notification to new customers disclosing details of their DISH account); Text Messages _ 
MyDISH _ DISH Customer Support.PDF, produced to PSI staff on June 7, 2016 (li.sting text 
message commands for DISH customers). 


-I- 



215 


back of their monthly bill (or enclosed in the same envelope), DISH informs customers of 
price increases in a variety of formats, including via text message, email, and/or set-top 
box pop-ups. 

4. Please provide a list of all promotional offers available between June 1, 2016 and 
July 31, 2016 that are “roll to pay” or that require customers to affirmatively cancel 
when that promotion ends or face being charged for that programming or service 
on their next bill. For those promotions that are “roll to pay,” please indicate; 

Response: Provided as separate, confidential attachment. 

a) Whether customers can cancel the programming or service online or whether 
they must cancel over the phone. 

Response: Customers can generally downgrade their service online or over the 
phone. 

b) Why Dish decided to make that promotion “roll to pay” instead of “roll to 
drop.” 

Response: Generally, programmers require that free introductory periods for 
premium promotions are offered only on a roll-to-pay basis. This arrangement allows 
DISH to provide programming to customers for free during a trial period, DISH 
would like more flexibility with these offers. 

5. Are front line agents allowed to downgrade or cancel a customer’s service if they 
request it? 

Response: All agents can adjust a customer’s programming or service package. 

Only DISH Loyalty agents are authorized to complete a customer's request to 
disconnect. 

6. If a Dish customer wishing to disconnect docs not want discuss their reasons for 
canceling service, Dish training documents instruct that, “[u)sing an effective 
transition statement to lead into probing will prevent disconnecting customers from 
realizing you arc working to save them.”'' If a customer calls Dish specifically to 
cancel their service, can they do so without being asked additional questions or 
being offered additional services? 

Response: Most customers who initially call to cancel their service actually have an 
issue that can be resolved short of disconnecting. As there are many possible nuance.? 
with such discussions, we believe that there needs to be conservation with the customer. 
Such reasons can include changing service levels, or a customer believing that they need 
to cancel their account when she moves. There are also complexities with disconnecting 
such as equipment returns and potential fraud issues, which also require a conversation 


■' DISH-PS120I5NOV-000425336. 


- 2 - 



216 


with a customer service agent. As such, many customers that called in to disconnect are 
still with DISH due to their productive conversations with a customer service agent. 

7. Are customer service representatives penalized if they fail to ask why a customer is 
changing or cancelling their service? 

Response: No. 

8. One suggestion that has been made by consumer advocates is to have a cable or 
satellite TV subscriber “bill of rights,” much like the Department of 
Transportation’s passenger protections for airline passengers, where consumers are 
guaranteed a certain level of customer service. Given that Dish has declared its 
commitment to a high standard of customer service, would Dish oppose such a “bill 
of rights”? 

Response: DISH supports industry efforts to improve customer service. DISH 
welcomes the opportunity to be a part of discussions about customers’ service 
expectations and providers’ service obligations. 

9. What steps is Dish taking to more effectively communicate how fees are charged on 
a customer’s bill? 

Response: DlSH's customer bills are at the top of the industry in terms of being easy to 
read and understand. This is tlie result of concerted efforts by DISH to promote 
transparency and avoid customer confusion. 

10. Dish advertisements do not include the post-promotional price that customer’s pay 
when their first or second year of service ends or their promotion rolls off, unless it 
is in the fine print. Docs Dish plan to include this information in advertisements in 
the future? 

Response: DISH communicates its post-promotional prices to customers individually 
through various notification methods. Each customer’s promotional price may differ 
based on the premium add-ons, equipment, and other features the customer includes in 
her .service contract. DISH strives to communicate any changes in a customer’s bill 
clearly and in advance of the adjustment. 


- 3 - 



217 


Post-Hearing Questions for the Record 

Submitted to Kathleen Schneider, Senior Vice President, Operations, Dish Network 
From Sen. Tammy Baldwin 

“Permanent Subcommittee on Investigations: Customer Service and Billing Practices in 
the Cable and Satellite Television Industry” 

June 23, 2016 

Q. 1 often hear from Wisconsinites living in rural areas about the challenges they face 
in accessing a range of telecommnnicalions services. I understand that there are 
significant costs involved in bringing these services to less-populated areas and I 
have strongly supported government efforts to facilitate that infrastructure 
development. 

What is Dish doing to ensure its products and services are available to individuals in 
rural areas across this country - and at comparable cost and quality to that 
provided to urban and suburban customers? 

Response: DISH is proud to be the only provider of local broadcast channels in all 210 U.S. 
media markets, providing service to rural and less-populated areas all over the country. In 
addition, DISH’s Sling TF service offers customers a low-cost alternative to traditional pay- 
television packages. For as low as $20 per month, any customer with an Internet connection can 
access many must-have cable channels including ESPN, AMC, CNN, and many more. DISH 
also otTers DlSHnet satellite broadband to subscribers across the country, with a particular 
emphasis on bringing service to rural and less-populated areas where cable/fiber/DSL is not built 
out, 


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